Gerardo Del Real
March 18, 2022
Today's capitalism isn’t the capitalism of years past.
Far from a perfect system, it’s delivered more to more people than anything else on the planet.
When practiced correctly, it can lift individuals, regions and nations.
Today’s version is a shadow of that.
The Fed has decided to raise rates a quarter basis point – the first rate hike since 2018 – and has indicated (chuckles) it plans to raise rates a total of seven times.
The same Fed that didn’t see inflation coming… then thought it was transitory… then sat idly by telling the market it had it under control while inflation raged.
That same Fed now wants us to believe that it’s all under control, markets will function smoothly through seven hikes, and all will be back to normal.
All this while Russia continues its attacks against the Ukrainian people.
All this while consumer confidence continues lower, mortgage rates tick higher and wages continue to lag inflation… by a lot.
The response has been what I told you it would be: higher gold prices as the worst case scenario, as outlined by the Fed, is negative real rates for a couple of years. And that’s assuming the Fed gets off its seven rate hikes.
In China, the government there has decided to support (buy) shares of companies and has directed regulators to “actively introduce market-friendly policies.”
The result for Hong Kong-listed shares was a surge higher as companies like Alibaba (NYSE: BABA) gained over 30% in one session.
Hard to lose when you own the casino.
Speaking of Hong Kong and casinos, the LME closed nickel trading after a very wealthy — and JP Morgan-backed — Chinese tycoon got caught on the wrong side of nickel surging over 250%.
He shorted nickel, messed around and found out. Except when the loss totaled billions he just made a call and had the exchange cancel the losing trades and suspend trading entirely until he could shore up (make another call to JP Morgan) his account.
After a week of being shut down the exchange reopened limit up and was halted again.
Price discovery, competition, the business cycle, accountability — these are the pillars of true capitalism.
And while the writing has been on the wall, the powers that be are now explicit in the corruption.
I’m sure it’ll all end smoothly.
You may want to own some gold.
If you already do, you may want to own some more.
Gerardo Del Real
Editor, Daily Profit Cycle