Powell Power: January 2024 MACR

Jay Powell dumped ice water on the rally. [The Rude Awakening] February 01, 2024 [WEBSITE]( | [UNSUBSCRIBE]( Powell Power: January 2024 MACR [Sean Ring] SEAN RING “You’re not the boss of me!” Jay Powell seemingly screeched as he poured ice water on the stock market rally. From [Kitco]( After the Federal Reserve left interest rates unchanged on Wednesday, Chair Jerome Powell used his press conference to push back against market expectations for rate cuts as early as the March meeting. “Based on the meeting today, I would tell you that I don't think it's likely that the committee will reach a level of confidence by the time of the March meeting to identify March as the time to do that,” Powell said. “That's probably not the most likely case, or what we would call the base case.” “There was no proposal to cut rates” among FOMC members, the Fed Chair added, though “some people did talk about their view of the rate path.” Powell reiterated throughout the press conference that the FOMC “does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%,” though he acknowledged that “inflation has eased over the past year.” The central bank did drop its oft-repeated reference to the potential for further rate hikes in Wednesday’s statement. Powell said the Fed's interest rate target is “likely at its peak for this tightening cycle” and they expect to cut rates “at some point this year,” but said the committee will take the necessary time to confirm that the data supports monetary policy easing. In response to a question about whether the U.S. economy has already achieved a ‘soft landing’, Powell said “We are not declaring victory, we think we still have a ways to go.” Stocks, gold, and cryptocurrencies fell on the news. But some still look like very bullish cases on the charts. With that in mind, let’s get to them. S&P 500 [Rude Awakening] The market did, indeed, take a breather, but only a small one. The long-term target remains north of 6,000. That doesn’t mean it’ll get there. But it does mean we’ve likely got a long way to go on the upside. Nasdaq Composite [Rude Awakening] A pullback to 14,400 would be healthy. We’re sitting above 15,000 here. Most of the drop is from Powell’s comments. We’ll soon see if there’s much followthrough or if the markets just shrug it off. Russell 2000 (Small caps) [Rude Awakening] Indeed, we reversed down to 192, as we assumed would happen last month. However, it’s unclear where we’re going from here, as we may just bounce up off the 50-day moving average. But keep your eye on this small cap index. As it goes, so goes the broader market. The US 10-Year Yield [Rude Awakening] The 10-year yield keeps declining. Much of the market is (still) looking for a rate cut, though I think they’ll be disappointed until mid-year. I am looking at 3.4% next. Dollar Index [Rude Awakening] We got above the 103 level I was looking for, but this is due to Powell’s hawkishness. How long will this last? I'm unsure. But if it continues, the next target is 105.5, followed by 106.5. USG Bonds [Rude Awakening] We got our reversal, down over two points since last month. But TLT popped on Powell. If we continue up, target 100. If we reverse from here, target 90. Investment Grade Bonds [Rude Awakening] We had a tiny reversal, not worth even talking about. This could be a consolidation for higher gains. The target would be 134 then. High Yield Bonds [Rude Awakening] This looks like a consolidation over the month. The upside target is in the 90s. I’d still be wary of a minor reversal here. Real Estate [Rude Awakening] We've got a full reversal going on here. It looks like the next stop is 80. Below there, 75 and then 70. [Claim a copy of the most dangerous book in America right now.]( This is the only book I’ve ever read that brings to life the horrifying fallout of a massive international currency war. A war that’s playing out as we speak. In fact, this book is so hair-raisingly accurate… I’m offering to send you a copy for free today as a way to help prepare you for what could happen next. But with only 500 copies in stock, once we are out, they could be gone for good. [Simply click here now]( and I’ll show you what to do. [Click Here To Learn More]( Energy: West Texas Intermediate (Oil) [Rude Awakening] We hit 78, but Jay Pow lowered the boom, sending oil back to 75.85. Between Israel, Hamas, the Houthis, and the Suez being shut, I can’t believe we’re still under $80. That’s the best indication the world economy is weak. Still, absent a universal peace, I can’t see this lasting. I’m looking at 83, at least. Base Metals: Copper [Rude Awakening] I got this one plain wrong. I thought we were heading to 3.30, but we reversed up to 3.90. The real economy is still awful, but copper thinks better of it for now. Precious Metals: Gold [Rude Awakening] Unfortunately, though the chart shows $2,067.40/oz., that bastard Mr. Slammy knocked it down to $2,040 overnight. I’m still bullish and think we’ll reach $3,000, but it will be a far more brutal slog than we imagined. Unless we get a surprise rate cut, that is… Precious Metals: Silver [Rude Awakening] Sideways Silver strikes again. There is nothing to report other than to hang on to your holdings. It’ll be worth it. We just need to get above $26 first. Cryptos: Bitcoin [Rude Awakening] BTC took a breather this month. I still target $47,000. With that said, if this is a top and not a consolidation, we could be looking at $33,000. Cryptos: Ether [Rude Awakening] Took a breather this month. New target is $2,820. Trad Asset Class Summary [Rude Awakening] Commodities led the way with a 3.72% return. Stocks finished second, with a 2.17% return. Oddly enough, the dollar also finished positively, up 1.18%. Bonds, as suspected, took a hit of -1.22%. Crypto Class Summary [Rude Awakening] Ether, Bitcoin, and Monero each had a hiatus, down only single digits. Bitcoin, Dogecoin, and Ripple were hammered by double-digit amounts. Wrap Up First, it was Christopher Waller. Now, it’s the man himself, Jay Powell, who’s thrown ice water in the face of March rate cuts. These are tricky times for the markets. Between World War 2½, supply chain realignment, and central banks, investors have plenty of bullets to dodge. Stay bulletproof, my friend. Finally, let’s take a moment, courtesy of the Twitterverse: [Rude Awakening] Credit: [@alifarhat79]( Have a great day! All the best, [Sean Ring] Sean Ring Editor, Rude Awakening X (formerly Twitter): [@seaniechaos]( In Case You Missed It… UniParty's Cognitive Dissonance Over Russia [Sean Ring] SEAN RING Winston Churchill famously said, “When you’re going through hell, keep going.” But that aphorism doesn’t apply to lost causes. There’s a time to quit, a time to burn the bridge. But for some reason - it’s probably “face” - the USG won’t walk away from the Ukrainian morass it needlessly got itself into. When I hopped on to X this morning, I saw this post: [Mark Warner Tweet ] Credit: [@MarkWarner]( Yes, that’s your friendly neighborhood Senator from the Commonwealth of Virginia posting from an alternate timeline. There, the war is over, and the US… I mean, Ukraine… is on the cusp of victory. But right after I read that, I scrolled down barely a screen and read this: [headline ] Credit: [ft.com]( They both can’t be right. And, of course, they’re not. [Before You Invest in AI, Watch THIS First]( Artificial intelligence is the greatest wealth-building opportunity for regular Americans in the past 150 years. Some estimate [it will be $15.7 trillion boom](. But most folks won’t make a penny. Why? [The AI Paradox](. Before you spend one nickel on AI… [I urge you to watch this first](. I’ll show you everything you need to know. [Click Here To Learn More]( Russia’s Robustness From the Eurocrat mouthpiece known as the [Financial Times]( (bolds mine): Russia’s economy will expand much more rapidly this year than previously expected, according to the IMF, as President Vladimir Putin’s military spending feeds through into wider growth. Gross domestic product is forecast to rise 2.6 percent this year, more than double the pace the IMF predicted as recently as October, and slightly slower than the 3 percent expansion estimated for 2023. The Russian upgrade, by 1.5 percentage points, is the largest for any economy featured in an update to the fund’s World Economic Outlook, released on Tuesday. The figures will raise fresh questions over the effectiveness of multiple rounds of Western sanctions aimed at depressing the fiscal revenues harvested by the Kremlin to finance its war in Ukraine. The Rude warned about these idiotic sanctions many times, [most notably here](. The [FT]( continues: The IMF’s prediction paints a stronger picture of the Russian economy’s immediate outlook than even the Kremlin’s own forecasters. Russia’s conservative central bank forecasted growth of just 0.5-1.5 percent in 2024 last November, a drop from 2.2-2.7 percent in 2023. The more bullish economy ministry has said growth in 2023 may reach 3.5 percent but expects a smaller rise of 2.3 percent this year. Pierre-Olivier Gourinchas, the IMF’s chief economist, said the new projections remained “somewhat preliminary” as the fund’s economists attempted to validate Russian statistics. “It is definitely the case that the Russian economy has been doing better than we were expecting and many others were expecting,” he told the Financial Times in an interview. This could be explained by the strong stimulus provided by government spending in the Russian “war economy,” he said. Firm commodity prices were helping to hold up fossil fuel-related export revenues and were an important contributor to overall activity. Besides that, it’s clear Senator Warner has the wrong end of the stick. Russia isn’t out of bullets. It’s fully armed with an economy thriving beyond Pooty Poot’s dreams. But as Goebbels is reputed to have said, “Accuse the other side of that which you are guilty.” America’s The One Out of Ammo Not only is America - and NATO - out of ammo, it’s paying dearly to have it replaced. David Sacks posted on X yesterday an unintentionally comical commentary on a Reuters article titled, “[NATO signs 1.1 billion euro contract for 155mm artillery ammunition]( First, the substance of the piece (bolds mine): BRUSSELS, Jan 23 (Reuters) - NATO signed a 1.1 billion euro ($1.2 billion) contract for hundreds of thousands of 155mm artillery rounds on Tuesday, some of which will be supplied to Ukraine after Kyiv complained of ammunition shortages. "The war in Ukraine has become a battle of ammunition," NATO Secretary-General Jens Stoltenberg told reporters after a signing ceremony at the Western military alliance's headquarters in Brussels. Ukrainian Defence Minister Rustem Umerov said last week a shortage of ammunition, which he described as "shell hunger," was a big problem for Kyiv's troops nearly two years after Russia's full-scale invasion. The NATO Support and Procurement Agency (NSPA) struck the deal on behalf of several allies who will either pass on the shells to Ukraine or use them to stock up their own depleted inventories. The article continued: A NATO official identified the buyers as Belgium, Lithuania, and Spain, which pooled together to benefit from the lower prices ensured by buying in bulk. The contract is likely to yield about 220,000 rounds of artillery ammunition, with the first deliveries expected at the end of 2025, the official told Reuters. The shells will be supplied by French arms maker Nexter and Germany's Junghans, according to an industry source. Sacks produced these numbers in [his post]( - 220,000 rounds is roughly a month’s supply in the Ukraine War. - The cost per shell is approximately $5500 — roughly 10X what it costs Russia to produce a similar shell. - It will take over 2 YEARS for the order to be fulfilled. Russia already produces this amount every month. Again, it’s [Glaucus versus Diomedes](. $5,500 per round? Are you kidding me? And why is Russia, an alleged “gas station parading as a country,” able to produce such ordnance for 90% less? And only 220,000 rounds, merely a month’s supply? And it’ll take two years to produce what those alleged kleptocrats in Russia can make in a month? Remember, America built an aircraft carrier every month during World War II! Sacks ended his post with a bang: “All that this signing ceremony has advertised is NATO’s weakness — the atrophying of its defense industrial base, the corruption of its military procurement process, and the incompetence of its elites.” I couldn’t agree more. Wrap Up It’s either willful lying or a stunning lack of self-awareness. Either way, the USG must wake up to the reality of the situation. When America was building an aircraft carrier per month, it could wage war in two separate theatres. But when it can barely get shells produced at a decent price, war is best avoided. Still, this makes me like aerospace and defense stocks all the more. 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. 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