Prepare for the Next Fed Meeting
Editor’s Note: This one’s for you.
If you’re reading this, chances are you own gold… invest in stocks… depend on a fixed income… or are wary of Big Government.
And if you’re nodding your head, then you must hear what my friend Andy Snyder – the founder of Manward Press – has to say.
I promised him I would get his urgent note to you.
Because we’re just days away from an event that could transform our money supply.
– Rebecca Barshop, Managing Editor
We spent Tuesday filming in New York’s famed Central Park.
We got a lot of looks. We suspect there aren’t a whole lot of folks who head to the iconic green space to rant about interest rates.
But we’ll take our tale anywhere someone will listen to us… especially this week.
We’re at a huge moment for the American economy.
With Jay Powell set to take the stage in just a few days and change the fortunes of the masses, it’s critical that folks know what’s going on.
Money – big money – is on the line.
Never before have we seen something quite like this.
Stocks are sitting near record highs. Inflation is right where it should be. And the jobs market is as good as it gets.
And yet, the money maestros at the Federal Reserve are about to wave their wands and send the band into a frenzy.
They have no choice.
They either blow up the stock market now… or crash the value of our currency later.
From what we see, they’re more than happy to let the next guy deal with the crisis.
That means we must prepare now.
If you haven’t followed this story, here it is in the simplest of words.
The Fed is screwed. It’s out of tricks.
Like a dope addict who needs a fix, the folks in charge of the nation’s money need to keep the economy juiced… but the stuff that used to get us oh so high just won’t do it anymore.
We need something stronger… or else.
Right now, $34 trillion worth of wealth is sitting in the American stock market.
That’s a lot of money. There’s a lot on the line.
And like we said, valuations are at record highs. American stocks are the most expensive in the world. But they’re that way only because money here is cheap.
The biggest buyer of stocks… is stocks.
The economy you see out the window isn’t all that real. It’s high on dope and propped up with Washington’s funny money.
And Ol’ Man Market is pretty wise. He’s seen a thing or two and knows an addict when he sees one.
So instead of taking on risky new ventures and building their businesses, many publicly traded companies are simply using their cash to do something that baffles many folks.
They’re buying back their own shares.
Apple (AAPL) has bought more than $239 billion of its own shares.
Exxon Mobil (XOM) has bought more than $104 billion.
And Microsoft (MSFT) has bought more than $94 billion.
Altogether, the value of buybacks surged by more than 55% last year. In fact, if all that money was pooled together into a single stock, it’d be the fifth-largest company on Wall Street.
It’s no wonder corporate buybacks are the leading source of volume on Wall Street these days.
But corporate America can buy only so many shares. Companies have only so much cash… until they need to borrow some more.
The Fed knows this. It knows it’s walking a fine line. And if it trips, the stock market could collapse.
It tried raising rates. The markets didn’t like the idea all that much. Investors threw a fit until the maestros came back on stage and promised to change the tune.
Powell promised to lower rates… and now we’re waiting to see whether he’ll keep his word on July 31.
If he does, the cost for companies to borrow will fall some more… so they’ll quickly issue more debt and buy up even more stock.
The spiral will continue. Our addict will get his fix.
But there’s a problem.
Rates can get only so low.
We’ve already hit zero once… Now it’s looking like the next crisis could send rates negative. It’ll be brand-new territory for the global reserve currency.
Few folks know it, but July 31 (next Wednesday) could be one of the biggest days in Wall Street’s history.
We may not see a rushing tidal wave… but the Fed is tossing a rock into the water.
The waves it creates will come crashing to shore.
It will give us plenty to talk about.