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How To Protect Your Wealth If The Fed Is Lying About More Interest Rate Hikes

Shortly after Fed Chair Jay Powell started talking in the press conference that followed the FOMC meeting and interest rate statement on Wednesday, it was clear what he wanted to emphasize. No, the Fed was not raising rates this quarter, but he really wanted us all to know that that doesn’t mean that hikes are over and that there is absolutely no intention of cutting the Fed Funds rate any time soon. I’m sorry Mr. Powell, but I don’t believe you and neither, it seems, does the market. Stocks are still showing strong Year to Date (YTD) gains and the yield curve is still inverted, suggesting that traders of all stripes believe cuts are coming.

The thing is, traders learn early to judge anyone in power, whether they be a politician, a CEO, or a central banker by their actions rather than their words, and the FOMC’s action at this meeting was to “pause” 15 months after they started to hike rates. No matter what Powell and other committee members may pronounce publicly, that action speaks volumes. Why would they do that if there wasn’t at least a suspicion in their minds that they have already gone far enough, or maybe even too far, in squeezing the economy? You can say that it is only a pause and that it is a prudent thing to do until you are blue in the face, but any of that is drowned out by the fact that the FOMC felt the need to stop the rate hikes and assess a situation that involves much reduced inflationary pressure and the…

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