After watching Federal Reserve chairman Jerome Powell change his tone in regards to Fed tightening over the last few months, the financial markets are largely expecting no action out of the central bank on Wednesday.
Although one potential wild-card has emerged, that could possibly make this week’s meetings one of the more memorable ones in recent times.
Certainly after watching the way the stock market started to really run into trouble last fall as interest rates were rising, it was hardly surprising to see the reversal by Powell and the Fed.
President Donald Trump even joined the action by criticizing the Fed for raising rates too quickly. Even though we’re a decade after the last crisis, and the Fed funds rate is still only at 2.5%.
Which is in direct contradiction to the notion that both Trump and the Fed have attempted to promote of the economy being strong and healthy. Because if that’s the case, why isn’t it time to normalize the rates and balance sheet yet?
However we live in a world where bankers and politicians don’t always do as they say, and don’t always say what they truly mean. During Trump’s election campaign he was talking about a gold standard, auditing the Fed, and how the stock market was a bubble. Now he’s done a 180 since then, and it’s a bit of a mystery what many of the key players might actually be thinking and planning.
Which is even more interesting now with the growing attention centered around the internet voice known as Q (or Qanon). Who many believe is a source of intelligence coming from within the White House.
To be clear, I am happy to admit that while I have been following the story, I am still discerning how much confidence I feel in the veracity of the posts. Yet with that said, I continue to hear from intelligent analysts who I trust and respect who have been completely won over and believe the messages are legitimate.
Which makes Q post 2575 rather intriguing. Especially ahead of this week’s Federal Reserve meeting.
(image courtesy of qanon.pub)
Whether this will manifest on Wednesday will be darn fascinating to watch. I have one reader who suggested to me that a 50-basis point hike may be coming this week. Which if that were to occur, especially given the context, would represent one of the more stunning events I can remember in financial history.
As not only would it serve as a confirmation of the messages Q has been sending, but also of the battle going on behind the scenes that many analysts and commentators have been talking about since before Trump took office.
Such a hike would also be significant in that it would be an indication towards the Fed really being prepared to let the bubbles pop. Which I was not sure they would ever really do, although if there is a 25-basis point hike, let alone a 50-basis point increase, the stock market conditions witnessed back in September and October could well end up looking like an appetizer compared to what would come next.
If nothing else, you can never argue that what’s going on is not more interesting than your average TV show. As Trump has essentially created the most fascinating reality show ever out of the Oval Office of the White House. And perhaps even regardless of what the Fed does this week, seeing how these bubbles are ultimately deflated will be some of the most stunning financial history the world has ever witnessed.
On Wednesday we get the next clue on how that path ultimately unfolds.
March 19, 2019
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