If you’re wondering why the media, markets and mandates are making less sense despite a constant flow of hard facts contradicting their message, it’s critical to watch what is done rather than said by the policy makers behind the fear and inflation “new normal.”
The Latest Fed-Speak Translation: From “Transitory” to “Persistent” Inflation
To the extent there’s anything exciting about a cornered Jerome Powell, he was at least able to drop some bombshells at his November 30th meeting before Congress, including a truly cutting-edge observation and fear that inflation forces are “more persistent” and that it’s now time to retire the word “transitory” regarding the same.
Well, Jerome, we could have told you that long, long ago, but this, of course, is no shocker…
More Taper-Talk (Distraction)
Perhaps more “exciting” was his not-so-subtle announcement that the Fed plans to begin a discussion at its next meeting to accelerate the Fed taper by a few months.
Despite the fact that any Fed Taper will in substance be a “non-taper” given backdoor liquidity tricks from the Standing Rep Facility and FIMA swap lines, the optics of such continued taper-talk will be negative for almost all assets save for the USD, the VIX trade, so-called “safe-haven” Treasuries and possibly gold.
Needless to say, BTC didn’t respond too well, dropping by 20% in the wake of Powell’s double-speak; as of this writing, it rose by 9% in less than 24 hours.
Such dramatic price swings, in our opinion, confirm that cryptos (despite “consolidation” and “adoption” pains) will never be stores of value but rather volatile (and yes, exciting) speculation assets—though we know the crypto circles (who will likely also ignore recent warnings [raised by Jintao Ding] of quantum hacker risks) will strongly disagree.
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