S2 E7: Powell Taps Out

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 As for "Powell Taps Out", Greg notes that at the May FOMC meeting, as he did in March, Jerome Powell offered subtle yet significant "signals" that the Fed has no interest in raising rates again, and that eventually there will be rate cuts. But nuance speaks more loudly, as the Fed is increasingly signaling that they are willing to acquiesce to higher general rates of inflation, and inflation expectations, as long as the labor market remains relatively "tight" and the Consumer continues to spend. 

 But the latter point is coming under attack, even as Powell's "downshift" in the policy narrative is causing ALL asset prices to appreciate, primarily because as US interest rates fall, again, the US-EU (German) Rate Spreads are narrowing, among others, meaning a lower premium is being paid to holders of Dollars, versus other currencies. A lower US Dollar is bullish for stocks, but in times of inflation a lower USD is MORE bullish for commodities, especially Precious Metals (Gold, Silver, Platinum) and commodities in short supply (Copper, Cocoa, Coffee, Wheat, Energy). Indeed, increasingly hard assets are outperforming paper assets, specifically over the last two weeks since our last podcast.