There is no Paul Volcker-type Fed official willing to do “whatever it takes” to stop inflation. Which means inflation is going to…
The $USD in serious trouble.
As I’ve been noting in recent articles, inflation is already in the U.S. economy. The last real bout of inflation the U.S. experienced was in the 1970s. At that time, the only thing that stopped the inflationary storm was Fed Chair Paul Volcker who raised interest rates to an astonishing 19%.
Volcker was fired of the economic carnage this policy created. And since that time EVERY Fed Chair has been terrified of raising rates.
Put another way, this time around, there is no Paul Volcker-type Fed official willing to do “whatever it takes” to stop inflation. Which means inflation is going to rage and rage.
See for yourself.
The below chart compares the performance of the S&P 500 to the performance of the Emerging Market ETF (EEM).
When the S&P 500 outperforms EEM, this chart rallies, and when EEM outperforms the S&P 500, this chart falls. As you can see, this chart has been in a steady uptrend for the better part of the last decade (since 2011 to be exact). However, that uptrend appears to be ending.
This means we would be entering a prolonged period of Emerging Markets outperforming the S&P 500 (similar to what happened in 2001-2011).
Why does this matter?
Because historically this ratio has lead the $USD by several months.
See for yourself.
The below chart shows the S&P 500: Emerging Market ratio (blue line) overlaid with the $USD (black line). As you can see, the ratio between the S&P 500 and Emerging Markets has typically lead the $USD by several months.
So if the S&P 500 : EEM ratio is about to take out its bull market trendine and start collapsing, this would mean we could expect the $USD to fall dramatically just as it did from 2001-2011.
In simple terms, this would mean the $USD collapsing in a secular bear market as inflation erupted in the financial system. Precious metals would EXPLODE higher as would commodities, crypto currencies, and every other “weak $USD” play you can imagine.
Those investors who are well positioned to profit from it could see literal fortunes.
On that note, we just published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.
The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU.
We are making just 100 copies available to the public.
As I write this there are just 19 left.
To pick up yours, swing by:
Chief Market Strategist
Phoenix Capital Research