Kris’ note: If the Federal Reserve couldn’t get the interest rate situation right in 2021 and 2022…
How can we expect it to get it right in 2023 and 2024?
And yet, not only do the markets still appear to trust the Fed and chairman Jerome Powell, but it seems the market believes it is managing interest rates “just right.”
That’s the only conclusion we can draw since the Fed’s latest interest rate decision.
At the last meeting (which ended November 1), the Fed kept the rate within the existing band of 5.25–5.5%. Since the market close on the previous day, the S&P 500 is up 4.5%.
That means it’s now back to where it was in June this year before its July peak.
So, is the market right to be so positive about stocks and the Fed’s stewardship of the economy?
According to former hedge fund manager Teeka Tiwari, the underlying answer is no.
While stocks have rebounded, and perhaps folks are feeling more positive about the future, there is a threat bubbling beneath the surface.
That is, what the government (and the Fed in particular) is doing to your money. Or rather, what it’s doing to the value of your money.
Over the past four years, the government, with the Fed’s help, has “printed” into existence trillions of dollars.
It has used these dollars to fund the budget deficit (the difference between what the government takes in taxes and what it spends) and prop up the economy through stimulus packages and other handouts.
For fiscal year 2023 alone, that deficit was $1.7 trillion. Since the end of 2019, it’s gone from $22.7 trillion to $33.7 trillion. That’s a 48.5% jump in just four years.
Of course, our financial problems began much earlier than that. Even before the 2008 financial collapse… and even before the U.S. abandoned the dollar’s link to gold in the 1970s.
This is a decades-long problem that is gradually coming to a head. Where inflation and artificially low interest rates have created the conditions for what Teeka calls the “Final Collapse” of the U.S. dollar.
Longtime readers will know Teeka as Legacy’s resident crypto investing expert. His decades of industry experience and track record of timely calls and market insights make him someone worth listening to when he says we need to pay attention.
From the rise of bitcoin to the collapse of the bond market… Teeka has an eye for major shifts in the markets and a keen sense of how those shifts impact the broader economy.
The collapse of the U.S. dollar will have enormous implications for people individually as well as for the U.S. on a global scale.
So while Teeka says that collapse won’t happen overnight, the conditions for the inevitable path toward that are happening right now. The next major step on that path happens this month. It’s important that people be prepared.
That’s why Teeka is holding a special feature event tonight at 8 p.m. E.T.
Fortunately, (if you can call it that) there is one way to help get around that problem.
The last time the dollar went through a similar crisis, his readers had a chance to make 27 times… 56 times… and even 850 times their money thanks to this solution.
And they were able to do that in less than two years. Simply by making sure they had exposure to this asset.
So, whatever you do today, make sure to read Teeka’s message below, and then join him tonight. It’s an event not to miss.
Over to Teeka for more, after we take in today’s market action…
The S&P 500 closed up 0.1% to end the day at 4,382.78… the Nasdaq gained 0.1%, to close at 13,650.41.
For individual stocks, Microsoft closed up 0.7% to $363.20… Apple ended higher by 0.6% at $182.89… and Tesla ended the day at $222.11, a 0.03% fall.
In commodities, West Texas Intermediate crude oil trades at $75.65… gold is $1,955.80 per troy ounce… and bitcoin is $35,739.36.
And now, let’s hand it over to Teeka Tiwari…
On October 10, 2018, I delivered my most public prediction ever on the Glenn Beck show.
During the interview, I told Glenn’s 5 million listeners that bitcoin would hit $40,000.
At the time bitcoin was trading a hair above $6,400.
Glenn thought my prediction was crazy. During the broadcast, he asked me, “Tiwari, are you sure you want to say that?”
That was during the brutal 2018 Crypto Winter. Bitcoin dropped from a high of $20,089 to a low of $3,191 between December 2017 and December 2018.
People just savaged my prediction. I had to look in the mirror and question whether I was wrong.
I re-examined my research, and I stood firm in my commitment that bitcoin would reach $40,000.
Fast-forward to 2021, and bitcoin blew past my prediction of $40,000… climbing as high as $69,000 in November 2021.
And guess what?
Glenn eventually invited me back on his show. Do you know what he told me? He “bought more” bitcoin and was “thrilled” he did.
Right now, bitcoin’s trading at around $34,500.
Even with its current pullback, you would’ve made five times your money if you bought BTC when I recommended it on Glenn’s show in October 2018.
And with a spot bitcoin exchange-traded fund and the 2024 halving on the horizon… I have no doubt bitcoin will surpass its old all-time highs again.
In fact, I expect bitcoin to hit $500,000 over the coming years.
Here’s why I’m telling you this…
Earlier that same year – just a few months before Glenn interviewed me on his show – I made another bold prediction.
It received much less fanfare than my bitcoin prediction on Glenn’s show… But today it’s even more imperative.
In fact, that earlier prediction I made back then is why I moved millions of dollars of my own money into bitcoin.
That’s because I believed back then – as I still do now – that we’re heading toward the Final Collapse of the dollar.
This Asset Is Getting Devastated
In March 2018, while many market commentators were calling bonds a “safe investment,” I was warning everyone within earshot to get out of them.
I knew massive government printing would erode the purchasing power of the dollar, and anyone holding bonds would get annihilated. Especially those holding long-term bonds.
I predicted interest rates would eventually need to hit 7% just to keep pace with inflation. And when interest rates rise, the price of bonds plunges.
Here’s what I said in a March 5, 2018, interview:
For the past 35 years, bond yields have generally gone down, and bond prices have gone up. And when something happens for that long, people start to call it a “safe investment.”
But bonds are anything but safe. Already since September , we’ve seen some long-term bond funds lose nearly 9%.
And this is far from over… Right now, we have rising interest rates and rising inflation. The last time we saw this happen was in 1981. The bond market fell 19% that year.
That was the tail end of a brutal 30-year bear market in bonds. During the last bond bear market, investors saw the value of their “safe” investments collapse 60%.
As with my bitcoin prediction, I was a bit early on my bond call.
To rescue the economy during the COVID-19 pandemic, the Federal Reserve lowered interest rates to near zero. And that temporarily sent bond prices soaring.
But those lower rates caused runaway inflation. And just as I expected, the long-term trend of rising rates and falling bond prices has resumed.
The Fed had no choice but to start raising rates at an unprecedented rate – 11 rate hikes over 16 months.
As you can see in the chart above, since the Fed started its current rate-hike cycle in August 2020 (red line), bonds (the blue line) are down 17%.
Friends, I believe we’re at the beginning of another long-term bond bear market. And things are about to get worse…
Right now, interest rates stand at 5%. Similar to my 2018 prediction, JPMorgan Chase CEO Jamie Dimon believes they can go as high as 7%.
At 7%, the net interest payments on $33 trillion would be in the vicinity of $2.1 trillion per year. That’s nearly three times bigger than the U.S. defense budget.
To cover these debt payments, the Fed will be forced to “print” money to buy its own government’s bonds.
When the Fed cranks up the money printer, it’s diluting the value of all the other dollars in the system. Just like when a company issues too many shares, it dilutes the value of the shares you own.
The result? The value of the dollars you own will shrink – a lot.
This level of debt is the endgame I’ve been warning you about… a “doom loop” that tips America over the edge from dollar superpower into dollar collapse.
Don’t Ignore This Prediction
Friends, out-of-control government money printing will lead to persistent inflation. But it’s a silent killer. And many people don’t know it’s happening.
It’s like a termite infestation in the foundation of your home. On the surface, everything looks fine. But crack open the foundation, and you see it rotted away.
That’s how inflation works. It eats away at your savings like termites eating wood.
And as I mentioned above, it’s about to get worse…
There’s an unprecedented event scheduled for this month that I believe will trigger the Final Collapse of the U.S. dollar.
It’s one of the reasons I moved millions of dollars of my own money into bitcoin to protect my purchasing power.
So you should absolutely buy some bitcoin. It’s a terrific asset. But the biggest gains during this Final Collapse won’t come from bitcoin.
To help you prepare for this event, I’m holding a special briefing called The Final Collapse on Wednesday at 8 p.m. ET.
During this event, I’ll tell you what this event is… and reveal the one asset that will skyrocket.
The last time the dollar had a similar crisis, my readers had a chance to make 27 times…. 56 times… and even 850 times their money – in less than two years.
And if you attend my special briefing on Wednesday, you’ll get the name of a recommendation absolutely free. (My past free picks have an average gain of more than 1,100%.)
Friends, those who ignored my bitcoin prediction in 2018 missed out on the chance to make peak gains of nearly 1,000%.
Those who ignored my warning about the bond market likely saw their bond portfolios go up in flames.
I don’t want that to happen to you.
Inflation is already destroying the retirement plans of millions of Americans. But if you follow my plan for this panic, you’ll put yourself in a position to potentially build a six-figure retirement starting with just $1,000.
Let the Game Come to You!
My (Kris Sayce) main task at TheDaily Cut is to try to “connect the dots.” That is, we help you figure out what events are about, what makes them important, their consequences, and what it all means for you.
But sometimes, we see the individual “dots,” but can’t yet figure out how they connect to anything. Maybe they never will connect to anything.
Regardless, if those unconnected dots feel as though they could be important, we’ll mention them here. And we’ll let you draw your own conclusions.
Today’s unconnected dots…
Sad news from Yahoo! Finance:
Short sellers are betting against electric vehicle (EV) and solar stocks, both of which have been on a downward trend.
A new report from treasury and liquidity management platform Hazeltree shows luxury EV startups Rivian (RIVN) and Lucid (LCID), along with EV giant Tesla (TSLA) were among the top 10 shorted names within large-caps and mid-cap stocks in October.
The report assigns a ‘crowdedness’ score, representing the securities that the highest percentage of funds are shorting.
This can’t be a good thing. The electric vehicle sector industry has barely gotten off the ground. According to Cox Automotive, the owner of Autotrader and Kelley Blue Book, at the end of the last quarter, EVs only accounted for 7.9% of new market sales.
This is another example of how low interest rates created a boom in asset prices that went far beyond what the industry deserved.
But there could be a contrarian take on this. Stocks like Rivian and Lucid are down 86% and 90% respectively over the past two years.
These funds have likely been short (betting on the stocks falling) EV stocks for some time. So the probability is that anyone joining the short trade today, is late to the game.
The better trade – in our humble opinion – is to wait and watch. Look for an uptrend in the sector. The EV sector will grow… there is a demand for EVs… and 15 years from now, EVs will have a much larger market share – but right now, on the investment side, everyone hates the sector.
And rightly so. But it won’t stay that way. The EV sector is one to watch… but wait for a rebound and a new uptrend.
Today’s top gaining ETFs…
iShares Residential and Multisector Real Estate ETF +1.5%
Global X MSCI China Consumer Staples ETF +1.2%
Pacer Benchmark Industrial Real Estate SCTR ETF +1%
WisdomTree Europe Hedged Equity Fund +1%
Xtrackers MSCI Eurozone Hedged Equity ETF +0.8%
Today’s biggest losing ETFs…
VanEck Gold Miners ETF -3.2%
iShares MSCI Japan ETF -2.6%
Siren Nasdaq NexGen Economy ETF -1.9%
U.S. Global GO Gold and Precious Metals Miners ETF -2.4%
Invesco S&P SmallCap Consumer Staples ETF -2.3%
If you have any questions or comments for our experts here at Legacy Research, we’d love to hear from you.
Write to us at [email protected] and just type “Daily Cut mailbag” in the subject line.
Editor, The Daily Cut