This is a free preview of a paid episode. To hear more, visit vblgoldfix.substack.com

Housekeeping: Good Morning

“Crypto and Gold are at all-time highs because the market is sniffing out a Fed that's going to tolerate higher inflation, which will give them, of course, weaker policy credibility.”

Summary:

For The Fed to witness recent harsh inflation upticks and offer little to no pushback against it or for that matter the market’s persistent expectations of rate cuts means implies a tolerance for a higher inflation level is here.

* It implies the target has been raised if not completely discarded.

* It also means the Fed is worried more about recession than inflation now.

The market sees this and is betting Powell has thrown in the towel on his 2% inflation target.

Hartnett’s Flow Show analysis goes through the signs this is in fact happpening

Hartnett’s Key Insights:

Fed may be more worried about Recession than Inflation for three reasons:

* because weaker Jobs implies recessionary slowdown

* and because the STIRS market continues to think Fed will ease in June despite bond yields creeping higher, exploding Gold and BTC prices

* Fed also not doing much talking down rate cut hopes yet

Therefore: market sniffing out Fed tolerating higher inflation targets. His forward-looking indicators are now starting to point to Stagflation as the risk as a result.

Charts Used: