Heads Will Roll! Fed Under Fire!

Heads Will Roll! Will Trump Fire Jerome Powell??

As a parent, I make tough calls to steer my kids toward long-term gain, often clashing with their craving for instant gratification. Last week, I caught my son sneaking extra screen time before bedtime. He begged to keep watching. He sulked, not grasping that unchecked habits could derail his focus and sleep. I limit their daily screen time, despite a possible arguement, knowing self-control now builds discipline for their futures.

Despite grinding up against their need for instant gratification, I see the messages sink in moments afterwards when they can reflect back. I talk to them about why we do things and the importance of decisions we make now and how that will impact our futures.

These talks plant seeds—they may not get it now, but understanding the “why” builds wisdom. They’ll see it when they’re older, perhaps as parents, balancing love, discipline, and the patient work of explaining choices for lasting growth.

The current economic situation has been basically a childish muck. 

It’s definitely not the first time there’s been tension between a U.S. President and the Federal Reserve. This time around, however, it’s out in the open and the American public actually gets to see what’s behind the curtain at the top levels of government.
 
President Donald Trump is known for speaking his mind, and what’s on his mind is getting Federal Reserve Chairman Jerome Powell to take action — or getting him out. Just like he did on the TV show “The Apprentice,” Trump is reminding the public that he won’t hesitate to fire anyone who can’t or won’t get the job done.

At this point, Powell isn’t pretending anymore that the Fed will fail achieve it’s “dual mandate” of keeping inflation down while avoiding a recession and high unemployment. The massive over-printing of U.S. dollars in response to COVID-19, followed by the Fed’s reluctance to lower interest rates after hiking them substantially, ensured that achieving both of the “dual mandate” goals would be practically impossible.

Retail sales data from March might look like a lifeline for Powell and the Federal Reserve, but don’t count on it. Supposedly, retail sales jumped 1.4% month-over-month in March, and at first glance, this might give the impression of a healthy economy.

Courtesy: Yahoo Finance

In other words, Powell and other Fed officials cannot take credit for the appearance of positive economic data. Now, the central bankers can only hope that April 30 will bring some encouraging data points. That’s the day when the the Personal Consumption Expenditures (PCE) index (the Fed’s preferred inflation gauge) and the U.S.’s first-quarter GDP stats will be released.

In the meantime, Powell evidently isn’t in any mood to take action. He’s expecting “higher inflation and slower growth” (which is a polite way of saying “stagflation,” but Powell and the Fed will sit on their hands and “wait for greater clarity” before considering interest-rate changes.

Trump has little patience for a Fed whose only plan is to sit on its hands and “wait.” Observing European central bankers taking decisive action on interest-rate policy, Trump remarked about Powell, “I don’t think he’s doing the job. He’s too late. Always too late.”

Along with that, Trump has hinted that it may be necessary to fire Powell; the Fed Chairman is digging his heels in, declaring, “I fully intend to serve all of my term.” The legacy media, as you would expect, latched on to the Trump-Powell conflict and launched a debate over whether a U.S. President has the legal ability to fire a Federal Reserve Chairman.

Amid the friction and uncertainty, a number of prime opportunities are immediately available to forward-thinking investors. Gold is the most obvious one, though silver shouldn’t be overlooked as it typically plays catch-up after a sharp rally in gold.

Courtesy: @murphycharts

If you really want to capitalize on the downturn in market sentiment, you can look at small-cap junior gold and silver miners. You’ll find some low valuation multiples even while the spot gold price is rising and silver is ready to snap higher.

Even traditional bankers, who are usually reluctant to consider gold, understand that a major rotation is underway in 2025. According to Bank of America, around 42% of fund managers now expect that gold will be the best-performing asset of 2025, up from 23% in March.

Moreover, UBS Global Wealth Management CIO Mark Haefele sees gold at $3,500 in 2025 as his “base case,” and he’s certainly not the only strategist bracing for a gold bull market. Be prepared to witness a shift in retail investor sentiment toward gold and then silver, as well as the companies that mine for precious metals — and when the sentiment shifts dramatically, so will the prices.