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So yesterday, while speaking at the International Loan-Sharking Fund (IMF), FOMC Chair Jerome Powell was verbally abused by a bunch of leftards paid by British Intelligence and George Soros (but I repeat myself) to shout him down.
The speech was abruptly stopped and Powell pulled off stage where his is caught on a hot mic saying, “Just close the f%cking door.”
Well, that statement resonates on so many levels given the situation. It’s a scene pregnant with so many subtexts that only those who have been exposed to my arguments about Powell get the subtleties of.
This is like a Act-climaxing scene in a movie, where the screenwriter has been setting up plot threads and ideas for the past 45 minutes or so and if he’s done his job right, the director, actors, editor and composer all nail the moment.
The audience laughs or cries or cheers … or if it’s the right kind of story, all three consecutively and concurrently.
This is what Powell’s hot mic encapsulates so brilliantly with four simple words. “Close the F$cking door.” It’s no different than when Trump ended Hillary’s 2016 presidential campaign with five words, “Because you’d be in jail,” at the debate.
She never recovered from that. It galvanized the Trump vote in a way that changed everything.
Think about the scene here:
Powell, the enemy of Davos who has cost them trillions, if not tens of trillions, is speaking at the IMF, an institution where they usurped US control in 2011 with the “Nuts and Sluts-ing” of Dominique Strauss-Kahn and inserting Christine “Leatherneck” Lagarde at the beginning of EU Negative Interest Rate Policy (NIRP).
He’s accosted by Climate Change “activists” because reasons in the hope of shouting him down so he can’t reiterate his message to the international investment community of “F$ck your puts, F%ck your bonds. I work for the US, not the world.”
When Powell finally got the door closed and began speaking again he did exactly as one would expect. But after last week’s FOMC presser where for the first time in over a year looked a little squirmy or evasive, the questions began to rise as to whether he was the real deal he’s been presenting.
The need for so many people in power and who made billions on ZIRP and NIRP to return to those rates is so great that you have to expect they would do whatever they had to to dominate Powell, force him to back down, and ‘pivot.’
The markets screamed this after last Wednesday’s presser, wildly interpreting Powell’s evasiveness as dovishness, which sent bond markets on an historic rally, only to peter out into the Friday close, as we discussed in the 11/8 Market Report.
Gold, metals, oil, natural gas, all get the monkey-hammer. The Euro rallies.
But the only problem is this…. the Bank of Japan ended Yield Curve Control. The only one left doing any form of QE is the ECB, by raising rates and managing credit spreads simultaneously. Markets were reaching their breaking point. Bloomberg and Zerohedge were equally breathless with heir “doomering” as Vince put it in the latest podcast (#Ep.161, released yesterday), if for completely different reasons.
So, there it was…. all the themes of the age, European integration, the Great Reset, Climate Change, a manufactured war in Gaza, the end of Project Ukraine, the UAW strike ending to unscrew the auto industry, manila folders hitting the desks of everyone from Joe Manchin to Lindsey Graham, Marsha Blackburn issuing a subpoena for the Epstein flight logs and Powell goes to the IMF to say the same exact thing he said a week ago.
Inflation isn’t tamed. We remain ready to hike rates again if conditions warrant. We won’t tell you up front what we’ll do. The metrics we are using to assess monetary policy are changing. Stop trying to outthink us.
The rallies in bonds and equities, the washouts in gold and oil have all begun reversing. Gold is the weakest, naturally. But it will be the strongest counter-rally when conditions warrant.
Today Mario Draghi comes out of his coffin to declare the EU needs more integration or it won’t survive, echoing his successor Lagarde’s recent statements. This is their big gambit. They have no other choice.
And they know it. But the EU is no where near ready for that kind of move. They know they face an existential moment and they are weakly trying to sell it while no one listens to them. The only way they can sell it is with a crisis. Lagarde will have to stop managing spreads. Just like Ueda at the BoJ had to STOP buying bonds.
They are hoping the US will explode over support for Israel and as we fracture over the next year because of their incessant astroturfing (like those that photobombed Powell’s speech and burned down Minneapolis 3 years ago) the EU can come together as a unitary economic system under the EC, morph fully into the EUSSR and become the global destination for orphan capital.
It’s a good plan.
Powell just told them to close the fucking door on it.
Luongo tells a great story. No doubt there is some validity to it, yet most of the occurrences he cites as proof of Powell’s genius are logical outcomes of the various structures in place long before the Fed’s rate hikes.
Japan has been controlling yield curves for decades, but nothing lasts for ever. Of course, rate hikes make it more difficult, but there is no world where negative rates are sustainable. They had to go up, even without Powell.
Europe was a basket case from the beginning of the EEC. They have more internal contradictions, as the Marxists love to say, than a rally of the woke. They have no common debt structure, no overriding political structure with democratic underpinnings, no common culture, no common language, no energy, no money, no borders, and frankly, no hope. Is it any surprise they struggle to sustain a coherent monetary policy? The fate of Europe was sealed luongo…err…long ago. Everything they do hastens the end.
Finally, in the US, a high interest policy is possible in a low debt environment. A trillion dollar interest payment, even for the great hegemon, will put an end to it. So will bank runs, failed businesses, wide spread unemployment and bankrupt public services. Rate rises, for all intents and purposes are over for this run.
“Rate rises, for all intents and purposes are over for this run.”
I will dissent. Rate hikes (short term), maybe.
Rate rises? The market will decide that, esp. at the longer end, and energy games will be a decisive factor. Soft based on the economy, perhaps, but spikes over geopolitics are all too likely. No SPR left won’t help. If I were Russia, I would exact some retribution this way against the West, while keeping allies happy.
I take your point about the fed not being the ultimate decision maker over time, pd. As to Putin, he seems always to be focused on the longer term good for Russia. In many ways he let’s his opponents determine the type of relations they have with Russia, while never stepping back from his bottom line. He wants to set a standard for dealing with Russia, not engage in the west’s petulance.
As well, the world economy is looking very unhealthy. Lower rates should follow.
All great points, Sir Strider.
This naive learner is still trying to understand the direction of the tide of interest rates.
This just in (not Trudeau, trying to add to the humorous “luongo … err … long ago)): https://www.zerohedge.com/political/moodys-cuts-usas-aaa-rating-outlook-negative
I repeat: something is different this time around. The suppression of gold to under 1940 tells a lot. How many stop losses do you think were triggered yesterday and today (talking about the players who were kicking themselves for missing the $200 rally from $1810 to $2000, threw in the towel and joined the party late and have been rinsed out)? Even breaking down $1930 before the next leg up begins looks possible now.
Same for oil. A rinse of this magnitude was needed to prove all oil bulls wrong, despite the war clouds/showers. The Is real fiasco is not over, not by miles.
I think next week sees 5% plus on the 10 year. Maximum the week of Thanksgiving.
This is not normal. Something has really changed.
GL