Craig Hemke, Founder and Editor of TF Metals Report, joins us to discuss the market reactions after the recent FOMC meeting on Wednesday afternoon, where Jerome Powell outlined that the Fed will increase their tapering by decreasing the amount of bonds purchased by $30 Billion per month, instead of $15 Billion per month starting in January. Craig also felt it was a noteworthy admission by Powell that they honestly have no idea of where things are headed in a year or two, where normally they act like their policies and tools have things more in their acceptable targets.
Next we recapped the higher inflation expectations, seen after another round of hot readings in the Consumer Price Index at 6.8%, the highest level since 1982, and a Producers Price Index reading near 8.5%. We discuss how the higher inflation reading was met with even more bond buying driving interest rates lower and creating even more negative real rates.
We wrap up by reviewing the precious metals sector bounced a little bit since the FOMC meeting, that Silver double-bottomed at $21.41 (the same exact level it tested as a recent low), and that the COT reports may indicate a turn in the tide. Craig unpacks other periods of history with negative real rates, and contrasts how markets reacted in response to a similar macroeconomic backdrop. We set our sites on the eventual rate hikes in 2022.