The Fed’s Waller: For Pete’s Sake, STFU!

Waller's comments tank stock, gold, and crypto markets. [The Rude Awakening] January 17, 2024 [WEBSITE]( | [UNSUBSCRIBE]( The Fed’s Waller: For Pete’s Sake, STFU! [Sean Ring] SEAN RING The economy is too important to be left to the whims of central bankers. Take Christopher Waller, for instance. Yesterday, the Fed Governor decided to flap his gums. The next thing I know is that I’m stopped out of my gold call options positions. I’m upset because I was wrong about my trade, but I’m happy because my risk management system worked as designed. I lost precisely the amount I was willing to risk. However… I prefer to lose because the market moves against me all on its own. Not because some bureaucrat gives a speech that clarifies nothing about nothing, and the market assumes something he may not have meant. Let me explain. What Waller Said From Nikileaks (Nick Timiraos) in [The Wall Street Journal]( A Federal Reserve official said that continued declines in inflation would allow the central bank to lower interest rates this year but that the process should be “carefully calibrated and not rushed.” Fed governor Christopher Waller, who was a leading advocate for quickly raising interest rates and then holding them at a high level to fight inflation over the past two years, signaled a shift in his view in remarks Tuesday. He warned against keeping interest rates too high for too long. “From now on, the setting of policy needs to proceed with more caution to avoid over-tightening,” he said. That sounds reasonable and a bit dovish. He continues: As long as labor markets and economic activity are solid, “I see no reason to move as quickly or cut as rapidly” as in previous rate-cutting cycles, said Waller. “When the time is right to begin lowering rates, I believe it can and should be lowered methodically and carefully.” Even that second bit seems logical to me. But the markets threw a hissy fit, especially gold. Gold wants its rate cuts, and it wants them now. How the Markets Reacted In a word, badly. But not all that badly in the same way. For instance, the disappointment in Mandell’s speech was barely noticeable in equities. But gold and gold miners took the news much harder. Note: all the charts are daily candlestick charts. So, the last candlestick is yesterday’s movement. The Dollar [Rude Awakening] The dollar popped, along with the 10-year yield. This isn’t great. J.C. Parets popped up on The Chart Report with this post: [Rude Awakening] If the dollar is up, the assets you buy with dollars (such as stocks, gold, and crypto) will go down. So, let’s look at them next. Stocks [Rude Awakening] The SPX was down a measly 0.4% on the day. [Rude Awakening] The Nasdaq finished down 0.19%. [Rude Awakening] The Russell was down a bit more, down 1.24%. Why did the Russell 2000 take a much larger hit? That’s because the Russell 2000 is an index of midcap stocks with more volatility than large-cap stocks. Gold [Rude Awakening] Gold futures were down 1.0% yesterday. It's not great, but it's not the end of the world. [“You need at least $100 of this asset — and it’s NOT gold” — Dr. Nomi Prins]( [Click here to learn more]( $100 is all you need… Former Goldman Sachs managing director Dr. Nomi Prins has identified an investment she’s calling ‘the world’s hardest asset’ – and she’s recommending it to friends, family, and followers. She’s talked about it on podcasts… live TV… and in her newest, bestselling book, Permanent Distortion. Dr. Prins says: “This asset has nothing to do with gold or silver, but it has many of the same features to protect your wealth – and preserve your privacy.” As the turbulence in our world grows worse and worse… [Click here now to see what Nomi is recommending before it's too late.]( [Click Here To Learn More]( [Rude Awakening] Kinross Gold, a gold mining stock on most gold investors' watchlists, was down 4.41% yesterday. (Disclaimer: I'm long KGC.) [Rude Awakening] Wheaton Precious Metals, the gold royalty stock, was down only 1.44%. (Disclaimer: I’m long WPM.) But Barrick Gold, whose call options I was long, got crushed. I got stopped out of my bullish trade. Barrick was down a whopping 9.52%. Painful. As in “butthole like a wizard’s sleeve” painful. [Rude Awakening] Regarding Barrick, [Dow Jones News Wires]( printed the following about 2.5 hours before yesterday’s close: Barrick Gold Corporation (GOLD) is currently at $16.26, down $1.38 or 7.82% --Would be the lowest close since Nov. 24, 2023, when it closed at $16.23 --On pace for largest percent decrease since Nov. 3, 2022, when it fell 8.65% --Currently down four of the past five days --Down 10.12% month-to-date --Down 10.12% year-to-date --Down 70.77% from its all-time closing high of $55.63 on April 21, 2011 --Down 13.28% from 52 weeks ago (Jan. 17, 2023), when it closed at $18.75 --Down 20.41% from its 52-week closing high of $20.43 on May 4, 2023 --Up 14.59% from its 52-week closing low of $14.19 on Oct. 3, 2023 --Traded as low as $16.18; lowest intraday level since Nov. 24, 2023, when it hit $16.11 --Down 8.28% at today's intraday low; largest intraday percent decrease since Nov. 3, 2022, when it fell as much as 9.27% All data as of 1:29:38 PM ET Source: Dow Jones Market Data, FactSet (END) Dow Jones Newswires Crypto [Rude Awakening] Bitcoin was down 1% but is sticking to its 50-day moving average. [Rude Awakening] Ether was down 1.65% but it looks like it’s consolidating here. What’s Next For The Markets? It’s up to the dollar. If the dollar continues to rise because the Fed is sending out feelers, the stock, gold, and crypto markets will be in deep trouble. Of course, it’ll take the bond and real estate market with them. Thanks to the Fed, we’re in a wait-and-see hole in the cycle. Wrap Up When I think of Christopher Waller, benign though his intentions probably were, I think of the 1999 Ronan Keating song, “You Say It Best When You Say Nothing At All.” I hope Mr. Waller and the rest of the Fed keep quiet until the next FOMC meeting. For all our sakes. All the best, [Sean Ring] Sean Ring Editor, Rude Awakening X (formerly Twitter): [@seaniechaos]( In Case You Missed It… Trump Wins 98 of 99 Iowa Counties; Vivek Drops Out [Sean Ring] SEAN RING The Geriatric Rematch of the Century inches closer. Donald J. Trump, “The Donald,” is one step closer to his destiny, a showdown with Joke Biden. The man everyone thought would start World War III will meet the man who actually started it for an Oval Office so tarnished they should call it “The Rotten Egg.” The results weren’t close, which only frustrated the purple-haired body-positive sideline reporters. No folks, plenty of people showed up despite 25 inches of snow blanketing the midwestern state. [Rude Awakening] Credit: [The New York Times]( [Rude Awakening] Credit: [The New York Times]( [2024 Will Be The Year of AI]( The coming second wave of AI could change your life and your finances starting in 2024. This is why our team of experts went live to show you what you need to do to prepare before it profoundly impacts you and your wealth in the coming months… And to reveal THREE tiny AI stocks set to explode during AI’s Second Wave. [Click here for all the details.]( [Click Here To Learn More]( Trump Takes the Field Without An Insult Being Fired In a seven-person race, Trump managed to win over 50% of the vote. [Rude Awakening] Trump was right not to participate in the debates. There’s simply no need. Hilariously, his decision not to participate in the debates made his opponents believe they had a fighting chance when they did not. If I were Trump, I’d send DeSantis back to Florida as governor with no job in DC, ignore Haley and hope she descends into oblivion, and hire Vivek. Immediately. Vivek Drops Out; Trump Says He Did a “Hell of a Job” Vivek Ramaswamy never had a chance at the top job. I don’t think America can handle his loud intelligence as the commander-in-chief. But, my goodness, does it need a man like him to drain the swamp! I wouldn’t give Vivek either the Department of State or Treasury. Even Defense is outside his wheelhouse. But Secretary of the Interior or Secretary of Commerce would be two good alternatives for a man of his talents. He’d be loyal and actually act. He could do the things Trump wouldn’t do in his first term, giving Trump plausible deniability the entire time. DeSantis Edges Out Neocon Nutcase Nikki for Second Surprisingly, Ron DeSantis pipped Nikki Haley at the post. Perhaps Governor Go-Go Boots gave up his high-heeled cowboy boots. Who knows? He did look his normal height, though. But how’s this for [Guardian]( tripe? Meanwhile Haley, the former South Carolina governor, had been seen as Republicans’ most moderate choice, with a better chance to beat Joe Biden in the general election than the candidates to her right. I don’t know a single person who thinks Haley is a centrist. She’s a lunatic neocon who wants to set the world on fire. I’m thrilled she came in third. Binkley, Hutchinson, and Christie Should Bow Out Why did these guys even participate? Chris Christie? Come on. A Market Rally For Biden? Oh boy, here it comes. As you know, the Rude has maintained its bullishness despite the potential headwinds to the economy. And you know me well enough to know I think the real economy stinks to high heaven. But none of that matters… yet. Because the disconnect between the real economy and the stock market is too big. The major indices were up big last week, though the Russell 2000 was not. And now, thanks to Nick Timiraos of The Wall Street Journal, otherwise known as “Nikileaks,” we see what the Fed is trying to do. From yesterday’s [Journal]( Fed officials are to start deliberations on slowing, though not ending, that so-called quantitative tightening as soon as their policy meeting this month. It could have important implications for financial markets. The Fed can shrink its holdings by selling bonds or, as it has preferred, allowing bonds to mature and “run off” its balance sheet without buying new ones. Runoff increases the supply of bonds that investors must absorb, putting upward pressure on long-term interest rates. Slowing runoff reduces that upward pressure. But whereas the Fed expects to cut short-term interest rates this year because inflation has fallen, its rationale for tapering bond runoff is different: to prevent disruption to an obscure yet critical corner of the financial markets. Five years ago, balance-sheet runoff sparked upheaval in those markets, forcing a messy U-turn. Officials are determined not to do that again. So we’ll have a few rate cuts and no balance sheet runoff while allowing the Federal Government to spend money like drunken sailors. Jay Powell doesn’t want to work for Trump again. Period. He prefers a less volatile boss. As Annie Lennox might have sung, “Here comes the liquidity again…” Peace in Ukraine? Do you know what else would save Biden’s bacon? Peace in Ukraine. Someone - and that’s the… ahem… “Churchillian” Zelensky - finally figured out the meatgrinder he turned his country into. From [Zero Hedge]( President Volodymyr Zelensky appears increasingly more serious about pursuing peace negotiations to end the war, and this was on display in comments issued by his top aide headed into the World Economic Forum (WEF) in Davos, Switzerland. Ukraine’s presidential chief of staff, Andriy Yermak, on Sunday, explained that Kiev now believes it is crucial for China to be at the table for future talks on its peace formula. "China needs to be involved in talks to end the war with Russia," the Ukrainian top representative said following diplomatic meetings going into the WEF. China remains the most influential Global South country widely viewed as squarely in Russia's corner, having refused to rebuke Moscow or join Western-led sanctions after two years of the conflict. Boy, would that take some pressure off Biden! The Davos Men are so happy about the peace, all the hookers are booked out! Again, from [Zero Hedge]( In a separate report, the French newspaper "20 Minutes" sheds even more light into this year's hooker-fest' at Davos: But anyone who wants to book an escort via the matching platform "Titt4Tat" in the Davos region, or even in eastern Switzerland, will be disappointed. "All local service providers are completely booked during the WEF week," confirms owner B. Konrad. The explanation: People kept to themselves in Davos, and their partners mostly stayed home. In addition, alcohol and parties contribute to the high demand for his service, according to the co-founder. "Apart from that, there are many customers in Davos who are not price-sensitive and who value the privacy of our app all the more," explains Konrad. In general, it's less about sex and more about the so-called "girlfriend experience," i.e., the pretense of an intimate relationship. Wrap Up The Donald wins, the Fed prints, and the market will rally. If we get peace in Ukraine, the US can redirect the military-industrial complex’s ire to the Houthis and then, maybe, Taiwan. Meanwhile, Davos Man must get more creative if he wants his piece. Have a great week! All the best, [Sean Ring] Sean Ring Editor, Rude Awakening Twitter: [@seaniechaos]( [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2024 Paradigm Press, LLC. 1001 Cathedral Street, Baltimore, MD 21201. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. To end your Rude Awakening e-mail subscription and associated external offers sent from Rude Awakening, feel free to [click here.]( Please note: the mailbox associated with this email address is not monitored, so do not reply to this message. We welcome comments or suggestions at feedback@rudeawakening.info. This address is for feedback only. 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