Get Ready for Taper Tantrum …

Hey There Income Hunters ,

 

Fed chairman Jerome “J-Pow” Powell must be a huge Tom Petty fan because yesterday he sang his best version of “I Won’t Back Down.”

 

Is this going to be a repeat of his Christmas Massacre of 2018? History does have a way of repeating itself …

 

Here is what the tapering could look like: a six-month take-back of $20 billion a month and be done with it.

 

 

But I highly doubt it will be that easy ….

 

Today I’ll show you why — and what the trade is going forward no matter what J-Pow ends up doing.

 

XXXX

 

Judging from yesterday’s reaction, I’ll say this. traders and investors are losing confidence in the Fed AND the US government …

 

      • Dollar: Down on the day 
      • Gold: Up 62% on the day 
      • Oil: Ip 2%
      • Commodities (BCOM): Up .7%

 

Those are not reactions that show the markets are afraid of the Fed reversing inflation or the commodity bull market that’s for sure …

 

The only market of concern in my mind is tech, as Nasdaq futures closed down just under 1%

 

Here is the thing: unless the Fed deploys yield control and holds down interest rates, rates will rise and that will put tremendous pressure on tech due to their massive debt.

 

Precious Metals 

 

Powell did stop the metals in their tracks yesterday as they were racing to critical breakout levels and did an about face once he opened his mouth …

 

It won’t matter in the long run, however. Next week will be interesting and we will see if sellers can get back in control of the metals and push them back to the lows of the range …

 

 

I Predict Silver Steams Ahead Based on 3 Key Facts:

  • Demand for solar panels 

  • Demand for electric vehicles 

  • Stagflation as the only result the Fed can produce 

 

That all adds up to this: Global growth and the energy crisis will force trillions out of tech and into commodities and silver.

The Chart below represents the SPDR S&P Metals & Mining ETF (XME) and SPDR Select Sector Technology ETF (XLK) Ratio …

This is the reallocation that has begun and has a very long way to go …

Just think about making 300% on your longs in the miners and metals and 300% by being short tech …

That is the potential of this move based on supply and demand in both sectors …

Consider the fact that the top-6 tech companies account for $10 trillion in market cap, while all the companies in the XME are $10 billion.

The world will want to move out of financial assets into real assets and yesterday’s reaction to Powell confirmed that.

Bring It Home

Did yesterday also confirm Powell will be reappointed to Fed chair?

His tough-talk stance is consistent with his previous approach.

So, maybe the administration realizes they shouldn’t rock the boat anymore then they have already or they risk an all-out boycott of US financial assets …

I still think he should be fired, but as I’ve said none of this matters in the long run — the green energy and EV revolution will dominate flows for years.

Let’s stay focused on that and just keep making loads of money.

Have a great weekend and as always …

Live and Trade With Passion,

Griff

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