Chris’ note: Yesterday the Fed hiked interest rates 0.75%. That’s its biggest raise since 1994.
That’s why I’m sharing a Q&A with Nomi Prins. She’s a former Wall Street banker who’s now dedicated to helping ordinary investors level the playing field with financial elites. She also often appears on Fox News to discuss the Fed – including yesterday.
Last night, she hosted a special briefing to reveal a new strategy that can help you 10x your money… whether the markets go up or down. She even shared the name of a recommendation she believes could double your money. If you missed it, catch the free replay here.
Then read on for my conversation with Nomi about how the Fed’s rate decision plays into the current market volatility.
Chris Lowe: Yesterday, the Fed announced an interest rate hike of 0.75%. And you hosted a special online event unveiling a new investment strategy you’ve been perfecting for two years.
We’ll get to that in a moment. First, let’s talk about the rate hike.
The raise brings the key lending rate to a range of 1.5% to 1.75%. Folks are wondering if interest rates might get to the double-digit levels we saw in the 1980s. Do you think that’s in the cards?
Nomi: I don’t think so. The Fed and other global central banks have fabricated too much money to take it all away
We now have markets no longer attached to fundamentals. Instead, they’re floating on a multitrillion-dollar cushion of central bank money.
In the past two decades, global central banks have conjured trillions of dollars out of thin air.
America’s central bank, the Federal Reserve, has been one of the main culprits. Since 2008, it alone has created $8 trillion.
The banking system and markets suck up all this cheap money and use it to buy financial assets. As a result, they have become permanently disconnected from the real economy.
That disconnect is the driving force behind what I call The Great Distortion.
Chris: In other words, The Great Distortion will continue. And the Fed’s rate hike doesn’t signal the end of the cheap money era.
Nomi: Right. Because a rate increase of 0.75% hardly makes a difference to the size of that massive book of assets.
Let’s say the Federal Reserve keeps raising rates, three or four times this year, by probably 50 basis points each time to get to a funds rate of 3.5% by the end of this year.
That’s a minor adjustment in the scheme of global money.
Even if it does that, global money controllers aren’t ready to raise rates by anything like that.
Big players like the European Central Bank and the Bank of Japan won’t do that. In fact, the Bank of Japan signaled it’ll do more quantitative easing (bond-buying) after it bought $22 billion worth of Japanese bonds on Tuesday.
Earlier this year, the People’s Bank of China reduced the cost of money after the Fed said it might increase the cost.
From a global standpoint, the Fed’s rate hike isn’t that much change.
The markets are panicking about change that’s coming as opposed to what that change will actually entail.
The Fed inflated markets when it manufactured this money.
That’s a fact that’s not going away.
And there are companies that are way overvalued relative to their fundamental metrics. Others are way undervalued.
It’s because of this distortion from so much money coming into the markets. Investors don’t care about fundamentals anymore because, in the long run, the Fed will keep pumping money into the market anyway. That’s also not going away.
The markets aren’t a perfect reflection of the real economy today. And they won’t be unless they correct to real values again.
They’re a reflection of so many other things: cheap money, the expectation of cheap money, and the knowledge that if things go more haywire, cheap money will come back more abundantly. We’ve seen that repeatedly. It’s all a matter of timing.
Chris: Can you walk us through how the Fed’s decision ties into inflation and the global squeeze on supply chains?
Nomi: Sure. Economies worldwide are weakening.
As prices rise, we’re seeing another pullback in general growth.
Just this month, the World Bank revised its expectations for global growth in 2022. It lowered them from 4.1% to 2.9%. And it expects growth to hover around 3% for 2023 and 2024.
On the supply chain side, some supply chains will stay stressed. Others will recover. But as much as people believe it can, the Fed can’t affect supply chain strain with its monetary policy.
The negatives in the economy will come onto the Fed’s radar. There will be inflation in prices where supply chain weakness is apparent – for example, where there’s instability or famine. We’ve seen it with wheat in Ukraine.
A lot of this chop won’t go away. But because markets hate uncertainty, the volatility will calm down once the markets understand that the Fed has done what it said it would do… or if it hikes rates less than what it has projected… or if it just pretends it’s done what it has to do.
I think that’s what will happen in the next year or so.
Whatever the case, we’ll see choppiness because of it. But we’ll also see calmer periods with consolidation.
Uptrends will continue – particularly in the sectors that have taken the worst beating… and in the names with the most potential to rise in share prices.
Chris: You and your team have spent two years crafting a system that identifies distortion signals in the markets so your subscribers can profit.
It’s based on the same type of strategy that you developed during your 15 years on Wall Street. Can you tell us more?
Nomi: We designed the strategy to help readers get ahead of big market moves… and make up to 10x their money, sometimes in just a few weeks.
I get emails all the time from readers worried about volatility.
That’s understandable. Markets have been ugly this year.
But my strategy works even in down markets.
I tested it with a small group of readers in 2020, in the middle of the COVID-induced crash. It was the fastest crash in history and produced a ton of volatility along the way.
While most people were losing their shirts… those readers had the chance to make more than eight times their money on a play I recommended.
That’s more than a 700% gain – while U.S. markets were plummeting more than 30%.
And that’s just one example… During the COVID crash, readers also had a shot at gains of 181%, 200%, and 468%, sometimes in just a few weeks.
Chris: You’ve identified five sectors set to boom because of the distortion in the economy.
At your event last night, you introduced your new advisory, Distortion Money Matrix. In it, you’ll dig deeper into those five areas. And you’ll recommend short-term trades rather than longer-term investments. Is that right?
Nomi: Exactly. With shorter-term trades, we pinpoint moments of volatility.
My strategy allows us to take optimal advantage of the timing of those major swings in the market. It lets us hedge against certain positions because of those swings… and profit in the middle of the volatility.
Chris: Nomi, thanks. If you couldn’t tune in to Nomi’s briefing last night, there’s still time to catch the replay before our publisher takes it offline.