A Fed Pivot Is the Market’s Dream. Here’s Why It May Come True Soon

[Inside Wall Street with Nomi Prins]( Welcome to Inside Wall Street with Nomi Prins! It’s the only daily newsletter featuring the insights of renowned author and former Wall Street insider, Nomi Prins. Every day, Nomi shines a light on a massive wealth transfer she calls The Great Distortion. That’s the true cause of the permanent disconnect she sees between the markets and the real economy. And she shares ways you can come out ahead, if you know where the money is flowing. You’ll find all Nomi’s Inside Wall Street issues [here](. If you have questions or comments, send Nomi a note anytime [here]( or at feedback@rogueeconomics.com. A Fed Pivot Is the Market’s Dream. Here’s Why It May Come True Soon By Nomi Prins, Editor, Inside Wall Street with Nomi Prins If you follow the mainstream media, you likely saw the headlines last week… “Traders Raise Chances for a Lower Fed Rate Hike in December” – CNBC “The Federal Reserve Pivot Is Coming in December” – Investor’s Business Daily “Fed Set to Raise Rates by 0.75 Point and Debate Size of Future Hikes” – The Wall Street Journal The WSJ piece made the biggest splash. It said some Fed officials are “growing uneasy with big rate hikes.” And that they’re starting to worry about the risks of being too hawkish. The Fed’s potential pivot is on many people’s minds right now. But if you’ve been reading Inside Wall Street, you already saw it coming. So today, I’m going to look beyond the headlines – and show you what you can do about it. Recommended Link [The media is right about one thing – we are about to witness a huge economic crisis...]( [image]( We all know the mainstream media will say anything for more viewers and clicks... But folks who are distracted by this kind of propaganda are about to be left behind. [According to renowned economist Nomi Prins, we’re about to see a crisis…]( But not the kind of crisis most people expect. This is unlike anything we’ve ever seen before... [Click here to see Nomi’s newest prediction before it’s too late.]( -- Three Stages of the Fed’s Pivot For months I’ve been saying the Fed will have to dial back its hawkish stance before the year is out. And in a [video update I sent you on August 29]( I laid out the three stages for that pivot. Here’s how I put it: The markets in general are going to continue to struggle to figure out whether the Fed is incompetent, dangerous, or both… But I still firmly believe the Fed will have to pivot… It’s going to go through three stages of that pivot. - The first is going to be a reduction in the size of rate hikes. - The second will be a pause in rate hikes. - And the third will be rate cuts, when it becomes blatantly obvious that the Fed is killing the economy. How long will it take to get through those three stages? That depends on a lot of factors. But I think the process will be a lot more condensed than it was in the past. After the 2008 financial crisis, interest rates remained at almost zero for about seven years. Then starting in 2015, the Fed gradually hiked rates over the next four years. In total, it raised rates by 2.25% before it eventually flipped. But the Fed is facing so many pressures that didn’t exist back then. From an energy crisis that could soon affect every person in America… to war in Europe, which has impacted supply chains and prices for necessary goods here at home, like food and gas. [Featured: “You can follow the money… all the investors are smelling it.” - Nomi Prins]( The Fed can’t stay hawkish for too long this time around. And with the Fed’s fund rate already higher than it’s been in more than a decade, the central bank is running out of room to maneuver. Then there’s that thing called debt. At writing, U.S. federal debt stands at a record high of $31 trillion. It costs about $680 billion to maintain the debt. That’s roughly 13% of the total federal spending. And it’s about $57 billion a month. If the Fed keeps raising rates, the interest payments alone could all but bankrupt the government. Recommended Link [Big Gains in Tiny Sector]( [image]( Despite tech stocks falling 26% this year overall… One tiny tech sector is having a booming year. In fact, in [this list of the 500 fastest-growing companies in North America right now]( Hundreds of companies in this sector are soaring, for gains of 200%... 500%... 1,000%... 10,000%, and much, much more. You can get your hands on the full list of names by [clicking here.]( Plus, you’ll get details on the #1 ticker to play this trend. It helped one small-town millionaire get rich again after he lost his millions. And in a recent interview, he revealed why he believes it could double again from here. [Click here for the full story.]( -- The Fed’s Unofficial Mandate Higher rates also hurt consumers and businesses. And that’s not good for the market, either. Remember, the Fed has an official dual mandate. The first part of its mandate is to maintain price stability (fight inflation). The second is to attain full employment. But as longtime readers know, I believe it also has a third – unofficial – mandate. And that is to protect the markets. The S&P 500 has already dropped as much as 20% year to date. On the surface, it might not seem like the Fed cares much about the markets’ reactions lately. But it does. [Featured: Wall Street “loser” becomes the trader for the Top 1%.]( The news stories I referenced earlier are a case in point. And last week, I got on the phone with one of my contacts in the media. Rumor has it that, for its past two meetings, the Fed has been alerting the WSJ and The New York Times two weeks in advance of its rate moves. To me, this is a manifestation of the Fed signaling the initial stages of its pivot to the media. And, by extension, to the big banks and the market. And as I wrote to you [earlier this week]( we already have a precedent for this from across the Atlantic. Last month, the Bank of England (BoE) became the first major central bank to pivot to “restore market functioning.” Right now, the Fed may have more wiggle room than the Bank of England. But it will have to face the music eventually. Recommended Link Market Wizard who predicted all indexes would be negative in 2022 shares shocking new forecast: [“Prepare for Five Years of Famine”]( [image]( [Click here for the name of the one ticker you need to protect yourself.]( -- What This Means for Your Money We can't know exactly what the Fed will do at its last two meetings this year. We’re probably also still a long way from the Fed slashing rates. But the softer language from Fed officials is a small step in the right direction. And now, others are starting to catch on. After the Wall Street Journal report came out, traders adjusted their expectations for Fed actions. Here’s what CNBC said about this last week: While a 75 basis point rate hike is still highly expected at the November Fed meeting, traders increased the chances that the December meeting would see just a 50 basis point move. As for my view, it hasn’t changed. I still believe the Fed will start pivoting this winter. That means the market may breathe a sigh of relief. And it may begin a path toward higher prices – especially for some of the hardest-hit sectors that rely on cheap money. That includes the Transformative Technology and New Money profit sectors we follow for you here at Rogue Economics. So, what does this mean for you? For one, this is still a great time to “buy the dip.” If history is any guide, short-term pain in the market is [only a loss for those who stop investing entirely](. But for anyone who buys in through the highs and the lows, it’s another opportunity to make a lot more money by staying consistent. That said, there’s still going to be a lot of chop. And with so many dips to choose from in this market, you need to be careful about managing risk. So, don’t invest all your capital on a single name or idea. And invest in small increments, rather than all at one time. For instance, consider investing half of what you’d allocate to that name now, and half in a few months, or when you see a dip. You can also consider investing smaller amounts over a longer period of time. This is what we call “legging in,” or “dollar-cost averaging.” This will allow you to spread your risk – even when you’re investing in what seems like an amazing opportunity. This sort of approach can help you protect your nest egg if one of your investments doesn’t work out. Which is still possible in these Fed-driven markets. Regards, [signature] Nomi Prins Editor, Inside Wall Street with Nomi Prins --------------------------------------------------------------- Like what you’re reading? Send your thoughts to [feedback@rogueeconomics.com](mailto:feedback@rogueeconomics.com?subject=Inside Wall Street Feedback). --------------------------------------------------------------- MAILBAG Readers have a lot to say about Nomi’s recent essays on former Fed chief Ben Bernanke (catch up [here]( [here]( and [here]( and thank Nomi for telling it like it is… I appreciate your analysis! You should be advising our U.S. government! – Deanna D. I had just read a few days before that Bernanke was largely responsible for causing the runaway inflation and bottomed-out stock market through his disastrous failed panacea “quantitative easing”… only to read a few days later that Bernanke had just won the Nobel Prize for Economics!? The committee was cutting him a check for $833,000, tax-free, no doubt. Say what? Why does this seem like an oxymoron? QE created an unstoppable global financial slump! Is this “Looney Tunes Goes Financial”? Or is there hidden international espionage afoot? Whatever it is, we'll be the last to know. – Diane Y. I was in mortgage lending for 28 years. The finance and housing mess started with Bush when he thought everyone should own a home. Then subprime started under Greenspan. He actually made a comment in one of his speeches that he didn’t think the subprime loans would affect the housing market. He couldn’t have been any more wrong. – Jackie C. I am always happy to read your essays. Personally, I think that the Fed will flip later than sooner, after having inflicted plenty of (too much) pain to the economy. – Paul B. How do you choose to invest your money during “the chop”? Will you consider investing half of what you’d allocate to that name now, and half in a few months, or when you see a dip? Write us at [feedback@rogueeconomics.com](mailto:feedback@rogueeconomics.com?subject=RE: A Fed Pivot Is the Market’s Dream. Here’s Why It May Come True Soon). 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