#942 There Is No Return To Normal

There is no returning to normal; we are living in the new normal. Manipulated Fed-run markets are the default now. You think people were pissed when they had to pay more for everyday goods at the same time that their investment portfolios were increasing in value? Wait till you see people's reaction when their investment portfolios are losing material percentages, and the price of goods are still high. That situation is coming faster than you think.

The louder I hear people screaming in fear of increasing rates and falling asset prices, the more bullish I get. As a friend recently told me, 'The only way you can be long-term bearish in this scenario is if you're willing to bet on the United States economy failing.' That isn't a bet I'm willing to take, and I doubt it's a bet any of you would take either.

This leads me to a fairly obvious prediction but one that seems to be contrarian at the moment: The Federal Reserve will be cutting interest rates before the end of 2022.

Regardless of how much tough talk the Fed has engaged in, there's only been an interest rate increase of 25 basis points so far. That was enough to usher in an annualized economic contraction of -1.4% in the United States and a -22% growth for the NASDAQ index. How much more can the Fed really raise interest rates if we are already likely in a recession trend?

What is worse than inflation for politicians? Recessions.