Jelly Donuts, the Fed, and What’s Next for the Economy

[Inside Wall Street with Nomi Prins]( Jelly Donuts, the Fed, and What’s Next for the Economy By John Pangere, Analyst, Inside Wall Street with Nomi Prins Jelly donuts. They’re a tasty treat. They’re not something you think of when it comes to monetary policy. And yet, that’s what famed billionaire hedge fund manager David Einhorn discussed at the Grant’s Interest Rate Observer Conference last month. I was there to hear from some of the top investors in the world. Guys like Einhorn, Paul Singer, and Jeffrey Gundlach. [Chart] John at Grant’s, a must-attend event for investors Together, they’re worth a combined $9.5 billion. So it’s worth listening to what these titans of the hedge fund world have to say. And there was no better way to kick off the conference than Einhorn and his jelly donuts. [Chart] Einhorn takes the stage with his jelly donut speech Recommended Link [How 1 Firm Using AI Could Unlock Affordable EVs (And a Fortune for You)]( [image]( A resource snag is slamming the brakes on America’s EV rollout… But one firm using AI has unlocked a novel solution. They’re racing to unveil a breakthrough I call the “EV Master Key.” If history is a guide, the stock I’ll recommend could soon soar: - “America’s First Master Key” created the first billionaire & turned every $1,000 into $1.3 million. - The “Hybrid Master Key” turned a backdoor investment in the Toyota Prius into a 17X moneymaker. - The “Smart Car Master Key” delivered gains of 14,000% — 280 times MORE than top auto stocks. Don’t miss your opportunity to take an early stake. I believe this firm could mint more EV millionaires than the rise of Tesla. Biden’s new emissions law could send this pick into overdrive in the days ahead… [Don’t wait. Click here to get all the details.]( -- You Can Only Eat So Much It wasn’t the first time Einhorn made this comparison. His speech at Grant’s was an update to one he gave in 2012. That 2012 speech was about the Federal Reserve’s easy-money policy at the time. Back then, Einhorn talked about how the economy was hungry. So the Fed kept feeding it jelly donuts in the form of cutting overnight lending rates and injecting it with cash. We can even see how this played out over the last decade by looking at the Fed’s balance sheet. Take a look… [Chart] For years, the Fed fueled a boom in nearly everything. Housing. The stock market. Even in bonds. It did this by expanding its balance sheet. It was one of the greatest bull markets of all time. And every new “jelly donut” the Federal Reserve fed the economy gave it a nice sugar high. It was a shot of energy that pumped up the market. Then came 2020 and Covid. This was the crescendo to the steady diet of jelly donuts. Except the Fed wasn’t feeding the economy one donut at a time. The economy was eating them by the dozen. In just a few short months, the Fed backstopped more than $3 trillion in stimulus. We all know what happened next. It kicked off one of the greatest speculative booms in history. As Einhorn told the audience, eating a jelly donut or two may taste great at the time. It gives you a nice sugar rush. But after a few dozen, you’re probably not feeling too well. It’s the same with the Fed. Each round of stimulus provided a boost to financial assets. Then came the Covid crescendo. Eventually, the market had too many jelly donuts. Something had to give. Now with the Fed reversing course over the past 18 months, the market is feeling the pain. Recommended Link [This “Amazon Loophole” Could Fund Your Retirement]( [image]( Using a little-known “Amazon loophole...” Regular Americans can collect up to $10,000 in payouts (or more) from what I call: “Amazon’s secret royalty program...” It’s all thanks to [a ‘loophole’ in the U.S. tax code]( buried on page 1,794, in section 561... In fact, regular Americans are already collecting as much as $30,000 in payouts from “royalty programs” just like this...* And the best part is: All you need is a few minutes and a smartphone to get started! [Click Here for the Full Story. (“Amazon Loophole” Revealed Inside)]( *Verified reviews. Past performance does not guarantee future results. -- Time for a Diet It was always inevitable that at some point, the party would stop. Zero percent interest rates can’t last forever. Because they eventually lead to some unintended consequences… Like inflation. It didn’t take long for the trillions in stimulus and super-low interest rates to raise the price of everything. At its most recent high, inflation hit an annual rate of 9%. In fact, the definition of inflation is an increase in the money supply. All that means is when you print more dollars, prices tend to increase. The official government rate of inflation is down quite a bit from its peak. But the problem is prices are now permanently higher. It’s like squeezing a tube of toothpaste. Once it comes out, you can’t put it back in. As the Fed ran its jelly donut monetary policy through Covid, it created enormous distortions between supply and demand. When inflation eventually came, the Fed dismissed it as transitory. It was just a temporary bump. But not all inflation was transitory. When the price of a good doubles or triples because of things like supply chain issues, that’s transitory. But when prices of everyday goods rise 10% in a year, that’s not transitory. That’s permanent. And there’s no going back. It’s all part of the Great Distortion my colleague Nomi Prins has warned about in these pages. Those distortions are now showing up everywhere we look. At the grocery store. At the hardware store. Even with services like Netflix, Amazon Prime, or Apple+. And what’s worse, that permanent inflation may continue to rise once we get a wage-price spiral. That means as incomes increase, the cost of goods and services will also increase. Something that started slowly but is accelerating today. [Chart] We can even see this wage-price spiral playing out in real time. Like the recent UPS driver contract. It bumped part-time pay 35% from $15.50 per hour to $21 per hour. And for full-time drivers, they will average $170,000 per year in pay and benefits by 2028. Not long after the ink was dry on the new contract, UPS announced price increases for its services. Something similar is happening with the United Auto Workers (UAW). At the start of the UAW strike, the union asked the big three automakers – Ford, GM, and Stellantis – for a significant package. As I write, Ford looks set to be the first to strike a deal with the UAW. It includes a 25% wage hike over the contract term and starting wages surging 68% to $28 per hour. The only way to make cars profitably at those rates is to pass on that added cost to customers. In fact, that’s already happening. Last month, Ford announced its flagship F-150 XL 2024 base model will retail for $38,565. That’s about an 8% increase over the 2023 model. Looking even further back, when Ford debuted the F-150 in 1948, it sold for $1,279. Accounting for inflation, that’s equivalent to about $16,500 today. In other words, you’re paying 134% more today for the same model. Sure, you’re getting a few more bells and whistles. But not 134% more. We can chalk all of this up to jelly donut Fed policy. But now, with a massive tummy ache, the Fed is trying to go on a diet. Raising rates is jelly donut policy in reverse. Or as Einhorn put it, we’re in Ozempic season. The Fed gave the economy diabetes, and now it’s desperately trying to find a cure. Recommended Link [“They Could FREEZE the Money in Your Bank” -Former Banking Executive]( [image]( This is coding from a new government banking program… [Giving them the ability to FREEZE the money in bank accounts – but also – RESET its value to ZERO…]( As a former Wall Street Banking Executive… never in my 40-year career, have I seen something like this… It begs the question – is this another conspiracy theory… …OR a sinister agenda to control your life? I traveled over 3,347 miles to [uncover this new agenda that could take control of YOUR U.S. dollars…]( What I found is historic. [And it’s why I’ve moved $11 million of my own money, in preparation…]( The stakes at hand? Every U.S. dollar you own. [Click Here to Watch the Full Expose and Get Prepared BEFORE December 13th at 2 p.m. ET]( -- Your Move In the world of economics, you can see what’s coming, but it takes forever to play out. The problem is, by the time the average investor notices, it’s too late. That’s where we are today. We can see some major cracks are forming in the system. But it may take longer to play out than we think. That doesn’t mean sell everything and go into hiding. What it means is looking for the areas of the market that tend to thrive on chaos. Or finding pockets of the market that investors overlooked for the past decade. Today’s market is tough. It’s not like the heyday of 2020 and 2021 where you got your fill of jelly donuts and everything seemed great. It’s more of a roller coaster that can make anyone green in the face. Which is why your next move may be one of the most important you make as an investor. Everywhere you look, there are pockets of distortion. One day, we get bad economic data, like the Philadelphia Fed Non-Manufacturing Index. It measures the direction of change of business activity for surveyed firms. The most recent number was -20.3 versus a previous reading of -16.6. A sign of business weakness. The next day, payroll numbers show a pretty solid job market. It sends conflicting signals to investors. It’s easy to get lost in the data and not know which way to turn. Luckily, there’s no one better at playing those market distortions than my colleague Nomi Prins. She’s a master at reading between the lines and doing extensive, boots-on-the-ground research to stay a step ahead. And she just released a new video presentation to help you get ahead in these distorted times. In it, Nomi tells you about one such opportunity that investors haven’t caught onto yet. [Watch it here](. Regards, [signature] John Pangere Analyst, Inside Wall Street with Nomi Prins --------------------------------------------------------------- Like what you’re reading? Send your thoughts to [feedback@rogueeconomics.com](mailto:feedback@rogueeconomics.com?subject=RE: Inside Wall Street Feedback). MAILBAG In yesterday’s mailbag, reader Peter argued that taxing the wealthy and corporations more would help eliminate the U.S. national debt. And we asked you if you agreed. Today, a reader expresses dissent, arguing that the problem is out-of-control government spending… No, I disagree with Peter. Everyone needs to pay taxes – the wealthy should not pay almost all of the taxes. What is the fair share of the 55% of people that pay no taxes? A flat tax makes everyone pay equally and everyone becomes concerned about the out-of-control government spending! The problem is out-of-control government spending and spending that is both wasteful and ineffective. The current example, the "Green New Deal" or as I call it the "Green New Steal." We will waste tons of money to create no value or help the planet. By suppressing our energy production, we give up high-paying jobs, tax revenue, low energy prices for consumers, and revenue from selling energy. – Greg S. Do you agree with Greg that the problem is out-of-control, wasteful government spending? What do you think is the solution to limiting America’s national debt? Write us at [feedback@rogueeconomics.com](mailto:feedback@rogueeconomics.com?subject=RE: Inside Wall Street Feedback). IN CASE YOU MISSED IT… [NEW EXPOSÉ: The shocking truth about AI]( The launch of ChatGPT kicked off a historic artificial intelligence (AI) boom. But now, a $200 trillion AI emergency could derail everything. Sam Altman – the man behind ChatGPT – admitted it’s crippling his entire business. Some experts even predict the company could go bankrupt. If you have any money invested in tech stocks right now… You need to see this new video that reveals the shocking truth about this $200 trillion AI emergency. [Watch it here before it gets removed.]( [image]( [Rogue Economincs]( Rogue Economics 55 NE 5th Avenue, Delray Beach, FL 33483 [www.rogueeconomics.com]( [Tweet]( [TWITTER]( To ensure our emails continue reaching your inbox, please [add our email address]( to your address book. This editorial email containing advertisements was sent to {EMAIL} because you subscribed to this service. To stop receiving these emails, click [here](. Rogue Economics welcomes your feedback and questions. But please note: The law prohibits us from giving personalized advice. To contact Customer Service, call toll free Domestic/International: 1-800-681-1765, Mon–Fri, 9am–7pm ET, or email us [here](mailto:memberservices@rogueeconomics.com). © 2023 Rogue Economics. All rights reserved. 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