I hope you had a great St. Patrick’s Day. And I hope that your NCAA Brackets aren’t completely broken. I’m still holding on right now…
Barely.
The good news is that I’m a risk taker. I changed Arkansas losing to Creighton at the last minute to Texas beating Creighton.
But I’m alive… and still dancing.
What does this mean for the market? Well, I’m sure I’ll find a metaphor somewhere.
Fed Interest Rate Decision: Mr. Powell, What Do You Do?
The next two days might as well be vacation days. This market will likely chop around.
Companies with insight into the order flow of retail investors will likely exploit it and fuel wild intraday swings between now and 2pm ET on Wednesday.
At that time, we’ll get the most important and decisive interest rate decision by the Fed since 2006. The Fed just broke the banks. Then they papered over the banks. And in 12 months, we’ll have a problem again as the discount window efforts will likely fuel another need for liquidity.
It’s sort of like a debt ceiling debate – but for the banks.
I anticipate that the Fed interest rate decision will be to increase by 25 basis points. I don’t see how the Fed can allow rates to stay put while Europe just raised rates by 50 points.
Remember, the European Central Bank has no authority over Credit Suisse (which is Swiss), but that massive Too-Big-to-Fail bank was a major counterparty to just about everyone.
Not raising rates sends a message to the world that our banking system is less stable than Europe’s. And no one wants that message plastered on the U.S. economy for the next few weeks.
Destabilization
This is a period of great destabilization. I’ve largely been waiting for it for the last 15 years, and here we are.
We have banking instability – requiring a new, unprecedented loan program. We have shotgun style M&A activity in Switzerland and the United States in the financial sector.
We have a debt ceiling crisis that will probably escalate our debate about the stability of our financial condition.
And we have political leaders who continue to make things up on the fly.
All the while, there remain severe challenges ahead around the supply side of our equation. We need to produce more food, we need to produce more oil. We need more housing.
And we don’t have the budget, as investment capital continues to pull back due to inflationary challenges and political uncertainty.
My overall view is that 2023 and 2024 are about to get much bumpier. I think that the markets recognize the severity of the situation. We can’t just solve every problem by turning on the printer and pushing more buttons to create currency units from the sky.
At some point, all these debts must be paid. And over the last 20 years, the fact that global economies have printed around $150 trillion to create $42 trillion in economic growth will eventually shock our conscience.
Post-Feb Interest Rate Decision: Now What?
If anything, it’s time to continue to focus on the things that matter.
Food, energy, housing, and even the shipping giants. At Tactical Wealth Investor, we’re focused on owning companies that will either deliver inflation-beating dividends or we’ll own companies that produce the things we need.
Most people are comparing the next few years to the 1970s. I’m starting to believe the situation will be even more difficult due to the overwhelming debts and the lack of adult supervision around our economy.
If you’re not buying oil producers that are trading at steep discounts to already incredibly cheap levels compared to the price of oil, I think you need to change your perspective.
You can sign up right now for Tactical Wealth Investor and own several of the best energy companies on the planet when you buy our top recommendations. My research shows this portfolio could double readers’ money in the next 36 months. Now is the time to take action.
To your wealth,
Garrett Baldwin
Market Momentum is Red
Momentum remains red as investors prepare for the Fed’s meeting on Tuesday and Wednesday. The central bank is likely set to raise interest rates by 25 basis points, defying the ongoing financial crisis and tackling our ongoing inflationary nightmare. We remain heavily in cash, and we remain hedged in existing positions. If momentum turns green, we’ll buy the rally. But for now, cash remains your best friend in this market.
