The Fed Is Full of Crap and Wall Street's Buying It

Why the hell would anybody trust or believe the words coming out of the Federal Reserve or its chairman, Jerome Powell? Why the hell would anybody trust or believe the words coming out of the Federal Reserve or its chairman, Jerome Powell? [Outsider Club logo] The Fed Is Full of Crap and Wall Street's Buying It [Jason Simpkins Photo] By [Jason Simpkins]( Written Jan 14, 2022 Why the hell would anybody trust or believe the words coming out of the Federal Reserve or its chairman, Jerome Powell? It spent the first half of last year telling us that inflation was "subdued," "transitory," and "unlikely to have a lasting effect." Seriously. It didn't think we'd get to 2% inflation until 2023! And Wall Street believed it. People like me were called alarmist fearmongers for pointing out the obvious flaw in its reasoning. Now, not even a year later, the tune has changed. Now the Fed now says high inflation (which hit a 40-year high of 7% last month) is "surprisingly high" and a "severe threat" to the economy. And now, the common belief being telegraphed by the FOMC and taken for granted by the market is that the central bank will raise rates three times next year. AT LEAST. Facebook Has Already Bet $50 Billion on ThisForget 5G — 2021’s Biggest Gains Will Be Here Mark Zuckerberg is no fool. So when he invests $50 billion in a brand-new technology, you'd better pay attention — especially when venture capitalists have also plowed $45 billion in it. Apple and Google have quietly added it to more than 1 billion smartphones. And this exclusive video reveals why this new tech breakthrough is about to revolutionize the computing world... and make a lot of people very rich. Early investors stand to make extraordinary gains of as much as 9,910%. But you have to hurry — this technology is about to go mainstream. [Get the inside story now.]( Yes, while the market has priced an 81% chance of three rate hikes this year, major investment banks are asking the question: "Why not four?" "It’s possible that inflation is worse than they think and they raise rates more than people think," says JP Morgan CEO Jamie Dimon. "I personally would be surprised if it’s just four increases." Goldman Sachs concurs. "We continue to see hikes in March, June, and September, and have now added a hike in December for a total of four in 2022," the bank wrote in a note to clients. Geez. No wonder growth stocks in the Nasdaq got pilloried to start the year. Wall Street is leaving them for dead because they think rates are going to shoot from zero to over 1% in the next 12 months. If I believed that I'd be rebalancing my portfolio, too. Of course, I don't believe that. To the contrary, I think the market might be overcompensating here. After all, if the Fed were serious about raising rates, wouldn't it have done so in December? Wouldn't it at least have pulled us up off the current 0% floor? And why isn't it telegraphing a hike at its next meeting at the end of this month? Why is it focusing instead on its meeting in March? I'll tell you why. It's because it's full of crap. The Fed spent a year downplaying inflation and then suddenly realized it was tone-deaf and out of touch. It started getting political heat from the Biden administration. So it started paying some lip service just to let everyone know it's on the job. Well, it's not. it's not going to raise rates until it absolutely has to. But here's the thing — come March, the economy may not be as strong as it is today. The #1 Strategy for Biotech Stocks? It’s no secret that biotech is the most exciting investment arena there is. There’s never a shortage of demand for new treatments for the world’s worst diseases, like cancer, Alzheimer’s, and arthritis. And with my new trading system, “Project Greenlight,” you’ll always know with up to 95% confidence which of those new medicines will be approved by the FDA and which won’t... This could set investors up to make six figures or more in biotech profits. And right now, there's a tiny biotech firm trading for pennies on the dollar with a medicine that’s on the brink of FDA approval... [Learn more about this unique opportunity today.]( U.S. GDP rose at an annual rate of 2.3% in the third quarter of 2021, which was well below the 6.7% increase in the second quarter. It's forecast to have bounced back in the final three months of the year, but economists don't see that lasting into 2022. Goldman Sachs' own analyst Jan Hatzius says GDP for Q1 2022 will range from 2–3%. And the bank cut its Q2 outlook to 3% from 3.5%, and its Q3 forecast to 2.75% from 3% because the Biden administration failed to pass its Build Back Better economic bill. The Democrats' over-hyped infrastructure bill was watered down significantly too. And now that inflation has become a huge part of the national discourse it's hard to see any more stimulus spending passing through Congress. That's why it's moved on to voting rights legislation instead. (Good luck with that!) Corporate earnings estimates aren't rising as dramatically as they did last year, either. And few companies have factored higher rates and stiffer economic headwinds into their 2022 forecasts. That could be a problem if supply chain issues persist, the omicron variant hinders global growth, and/or U.S. consumer confidence gets dampened by inflation. That's doubly true for the global economy, which has been more negatively impacted by those last two things (inflation and omicron). According to the latest Bloomberg nowcasts, the global economy is expanding just 0.7% in the final three months of the year, half the pace of the previous quarter and below the rate of around 1% prior to the COVID crisis. So essentially, the Fed is going to be raising rates just as the economy starts to slow and amid serious downside risks. New Robot Has Tech Execs Scrambling You might not believe this is even real, but I assure you this video has been left unedited. Nearly every tech company in the world is scrambling to get its hands on this tech. And investors are set to profit handsomely. Get the details on [our Top 3 Stocks Picks here.]( Those rates are hypothetical now, but they're going to become very real this spring. And the adjustments to that new environment — one in which monetary policy is tightening — will accelerate. I don't anticipate that that will go smoothly. And one more thing... The producer price index surged 9.7% percent in 2021 — its largest calendar-year increase since the data was first calculated in 2010. But in the final month of the year it rose just 0.2% from November — its slowest increase in over a year and half. This was due to a 0.4% decrease in the cost of goods. It's way too early to read too much into that tiny bit of data, but it just might be that after a year and a half of scorching inflation, price pressures may finally be starting to ease. We'll know if that's the case come March. So will the Fed. And if that is the case, if inflation doesn't look quite so bad (especially when compared to last year's record gains), and the economy is cooling, the FOMC's tone will probably turn a lot less hawkish. And there's no way we'll see four rate hikes — maybe not even three. Fight on, [Jason Simpkins Signature] Jason Simpkins [follow basic]([@OCSimpkins on Twitter]( Jason Simpkins is Assistant Managing Editor of the Outsider Club and Investment Director of Wall Street's Proving Ground, a financial advisory focused on security companies and defense contractors. For more on Jason, check out his editor's [page](. *Follow Outsider Club on [Facebook]( and [Twitter](. Browse Our Archives [Joe "No Plan" Biden: POTUS Plan as Empty as Store Shelves]( [Chewbacca Almost Killed Me]( [NASA Just Deployed a $10 Billion Time Machine]( [Safety May Be the Best Option in 2022]( [The 2022 Energy Reckoning: Reality vs. Expectation]( --------------------------------------------------------------- This email was sent to {EMAIL}. It is not our intention to send email to anyone who doesn't want it. 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