The Prospector News Publisher Michael Fox is joined post Fed meeting by Chris Temple of the National Investor. We were surprised this week by the apparent pivot Jerome Powell made in the Rate announcement meeting suggesting that rate hikes may be done and there could be easing in 2024. Chris suggests that there may be some underlying bad condition that is not yet visible to the markets to make Powell blink as rapidly as he did. Up to this point the mantra had been “Higher for Longer”.

We discuss how and why we both felt that this pivot may be pre mature and that inflation is in fact not done with us. There are several realities coming that don’t seem to be factored in. Higher energy prices, Gov’t policy, Opec etc. seem to be determined to curtail supply which would lead to higher prices. And Higher energy prices run through the general economy creating more inflation. Chris feels that a new energy crisis is quite possible. New union contracts with higher wages and benefits have yet to be factored into costs of a lot of consumer goods (especially automobiles) and could create a wage/price inflation spiral.

So if inflation isn’t done with us what could happen with Fed policy in 2024.

1. They could bail on Powell’s euphoric Christmas statement and go back to the “Higher for Longer’ Policy

2. It is an election year so they might stay the course for incumbent administration

3. They could redefine the target inflation rate to be higher than the 2% Target

We also see a split in inflation between the things we have to have. (Food, Shelter, Gasoline, medical insurance) and the things that we might want. All this could in a long term outlook be Bullish for Gold (the commodity) as it would lead to an increase of gold as an inflation hedge as well as being boosted by a higher price by a lower US dollar (also an inflationary pressure on the general economy) In a short summary it could be the start of the “Great Stagflation” that Chris has been seeing for quite some time.

Read Chris’ Prospector News Cover Story Here 

The National Investor