Did someone get the number of the truck that just ran over
my portfolio?
The Fed FOMC met yesterday and made a very technical change
on the interest rate on their reverse repo facility. They have been having difficulty explaining
what was exactly taking place and they hoped that by bringing up the rate, that
use of the facility would relax. There
was talk about inflation, as expected, and chairman Powell said the Fed would
stand ready to do what was needed to anchor inflation expectations at 2%. Nothing surprising there. There was no tapering of asset purchases and
the soonest we are looking at raising the Fed Funds rate is 2023. That’s two years down the road! The market’s
reaction was that the reflation trade was back on (QQQ up), and sold off any
asset that was inflation related (gold and silver down). To me this is crazy talk. The Fed announced no changes to their current
policies and that we are only “talking about, talking about tapering”. The Fed intends to buy $120 billion in asset
purchases over the next 18 months (the approximate date of raising the Fed
Funds rate). This is $2.2 trillion in
dollars that didn’t exist before and they will continue these asset purchases
until “substantial further progress” has been made towards the Fed’s maximum
employment and price stability goals.
Substantial progress was not defined.
This could mean that the Fed is buying even as it is lifting the Fed
Funds rate. The is recklessness. So, what does that mean for me today?
I’m adding to my collection of PSLV, PHYS, UGL, AGQ and the
precious metal miners CDE, FSM, and AUY.
I’m also looking at options on SLV.
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