S4E8: Warsh Does the Jackson Hole Two-Step
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In August of 2008 when Jerome Powell assumed the "Chair" of the US Federal Reserve Bank the FOMC published eleven "White Papers", over 300 words, hundreds of formulas, theories, historical, testing. I read every single word, within which the Powell-Fed laid out their "New Policy Paradigm".
The new Policy Paradigm in 2018 was a pledge to LIFT inflation to a level ABOVE 2%, after years of sub-par rates.
Thus the "two step", as Kevin Warsh dances away from that policy to his own new policy paradigm, or at least a Policy PLEDGE...to bring inflation DOWN to BELOW 2%.
We have come full circle.
The PROBLEM with Warsh's speech, long on words, short on meaning or definitions, lies within the White House, because raising rates is NOT helpful to Bessent's task of bringing Bond yields down.
You CAN NOT HAVE BOTH...not without losing ALL credibility and likely losing the Bond market and US Dollar at the same time.
But "they" may want BOTH, and when Trump tells Warsh to "get smart", it makes me think of Maxwell Smart, the bumbling spy (Bessent), working for the clueless "Chief" (DJT), with the sharp and cerebral sidekick "Agent 99" (Warsh)...being in CAHOOTS.
If that does turn out to be the case, be short the US Dollar, long Gold, long Energy, long Agricultural Commodities, long Strategic Metals.
Indeed, the XLE Energy Sector ETF is now THE UPSIDE LEADER in the US stock market, after violating a two-decade long downtrend line, relative to the S+P 500.
The new paradigm for investors...buying STUFF "over" PAPER IOUs!
Get the details on ALL these things, in Season Four, Episode #8...of Money, Markets & New Age Investing.
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