Rate Hikes Might Finally Be Over for Good

The Federal Reserve hiked interest rates again last week. But higher rates can't last much longer – because the money supply is already tight enough... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [DailyWealth] Rate Hikes Might Finally Be Over for Good By Brett Eversole --------------------------------------------------------------- We can finally put the worries of runaway inflation to bed... The most recent Consumer Price Index data came out last month. It showed that the overall inflation rate had dropped to just 3%. That's down from 9.1% at the peak last June. That incredible decline is great news for all Americans. It means the painful price increases on our consumer goods are slowing down... And for investors, it's also quite the gift, as stocks have been rallying on the news. Still, in an outrageous move, the Federal Reserve hiked interest rates again last week. But based on logic – and the market's reaction – those rate hikes are nearly finished, too. And that's a massive win for stocks. Let me explain... --------------------------------------------------------------- Recommended Links: [Real Money Demo of Our Most Successful Research Service]( PGA Tour golf pro Kevin Kisner will try to collect $4,000 in 60 seconds, without touching stocks, bonds, or any conventional investments up front. Win or lose, you can watch his entire transaction... and how we've booked a 94% success rate since 2010. [Click here (includes free recommendation](. --------------------------------------------------------------- [A Massive Wave of Bankruptcies Is Coming]( While the stock market hums along, a much bigger (and more important) market is flashing a huge warning today. This will definitely affect stocks... housing... and the entire economy. Ignoring this signal would be a big mistake. But billionaires (and some of America's top analysts) LOVE this kind of turmoil because it's a chance to buy world-class investments for pennies on the dollar – not to mention, it's a rare opportunity for you to see 700%-plus gains based on history. [Get the full story here](. --------------------------------------------------------------- It all started with the Federal Reserve's aggressive plan to kill inflation back in March 2022. The initial thought was that interest rates would need to rise above the inflation rate to get inflation under control. So, the Fed has pushed the target federal-funds rate to 5.25% in one of the fastest rate-hike cycles in history. Interest rates are well above the inflation rate today... which means the Fed's job should be over, right? That's what you'd expect. But apparently, the Fed never got the memo... Last week, the Fed announced that it would take us to 5.25% with another 25-basis-point rate hike. It made that decision despite choosing to pause in its previous meeting. Now, let me be clear... This is absolutely crazy. The Fed's call to keep hiking rates is borderline negligent. The central bank has already achieved its goal. Inflation is down, and the economy has clearly cooled versus where it was two years ago. Regardless, higher rates can't last much longer... because the money supply is already tight enough. Heck, it's tighter than almost anyone realizes right now. We can see that through the "Proxy Funds Rate" from the Federal Reserve Bank of San Francisco. This indicator takes the normal federal-funds rate and adjusts it for greater accuracy based on what the Fed is doing with its balance sheet. Lately, the central bank has been shrinking its balance sheet. And that's tightening the money supply. Right now, the Proxy Funds Rate is a staggering 6.9% – well above the reported fed-funds rate. Take a look... This chart shows that the money supply is much tighter today than the 5.25% fed-funds rate would indicate. And given the massive decline in inflation, it's one more reason to believe that rate hikes are darn close to ending, if not already done for good. Of course, nothing is certain. But the Fed has done its job. And soon, it should realize this fact and stop clamping down on the economy. If you look at the stock market, it seems like most investors expect the Fed to ease its approach. Stocks are up since the Fed hiked rates last week. We're also darn close to new all-time highs. The S&P 500 Index only needs to rise another 5% to get there... And with rate hikes coming to an end, I expect we'll hit that milestone sometime this year. Good investing, Brett Eversole Further Reading Recoveries like we've seen this year are even more rare than you might expect. Stocks have only turned around this dramatically four other times over the past 73 years. And based on history, we should expect more gains ahead... [Read more here](. Individual investors are starting to feel better about the market. You might think that's a contrarian warning sign. But we shouldn't worry about a peak in stocks yet – because sentiment still has plenty of room to run... [Learn more here](. --------------------------------------------------------------- [Tell us what you think of this content]( [We value our subscribers' feedback. To help us improve your experience, we'd like to ask you a couple brief questions.]( [Click here to rate this e-mail]( You have received this e-mail as part of your subscription to DailyWealth. If you no longer want to receive e-mails from DailyWealth [click here](. Published by Stansberry Research. You're receiving this e-mail at {EMAIL}. Stansberry Research welcomes comments or suggestions at feedback@stansberryresearch.com. This address is for feedback only. 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