The Fed’s #1 job and central purpose is to support financial markets. The Fed is a private corporation, shares of which are owned by its member banks which ultimately derive profits from inflated US equity markets. While taming inflation is an important narrative and present goal of the Fed, it will always be superseded by the Fed’s desire to keep markets elevated, especially during a mid-term elections cycle. We expect rate hikes to continue into early 2023, where a pause will occur as the US enters a recession, forcing the Fed to pause its hiking and quantitative tightening. We have forecast since early January that markets were expected to whipsaw back and forth producing volatile swings, inside specific trading ranges, scaring many retail traders until Q3 where a sustained ramp up into new all-time highs for the SPX should be seen into September. We forecasted a top April 18-22nd for weeks and the NDX began to sell off before that peak, but the Dow formed its peak on the 19th. A low is expected this week in the SPX. A more detailed trading trajectory will be shared in our nightly briefings for Gold Members. A link to try Gold for free can be found at the end of this briefing. Big picture – new all-time highs are coming into Q3, but the volatility will not subside anytime soon. With that said, we see no crash event occurring in 2022.
Since last fall, we have pointed to early March 2022 generating a peak in many major commodities. Precious metals, oil, industrial and rare earth metals, and many agricultural commodities did just that. Natural gas was the outlier, peaking with a blow-off multi-month top last week. Our next major peak will generate near September 2022. Expect to see prices enter renewed uptrends again starting in Q3 to new yearly highs for many of the commodities mentioned.
Past Week’s Economic Data:
Existing Home Sales: Miss
Building Permits: Beat
Philadelphia Manufacturing Index: Miss
Initial Jobless Claims: Miss
Upcoming Economic Data:
Tuesday: Core Durable Goods Orders, CB Consumer Confidence, New Home Sales
Thursday: Q1 GDP, Initial Jobless Claims