One Of The Greats In The Business Just Flashed This Major Alert On Gold And Warned 2019 Is Going To Be A Wild Year For Financial Markets

Friday, November 23, 2018
By Paul Martin
November 23, 2018

As global markets near the end of another wild trading week, one of the greats in the business just flashed the major alert on gold and warned 2019 is going to be a wild year for financial markets.

Everything Is Cool
By Trey Reik, Senior Portfolio Manager, Sprott USA
November 23 (King World News) – On November 14, Fed Chair Jerome Powell and Dallas Fed President Robert Kaplan conducted an onstage question and answer session at the Dallas Fed. Responding to President Kaplan’s questions, Chair Powell’s cool-and-collected delivery made U.S. monetary policy seem like an absolute snap. The upbeat message from the Dallas stage was best summed by Mr. Powell’s observation that “Fed policy is part of the reason the economy is in such a good place right now.” However, because U.S. financial markets have remained noticeably rattled ever since Mr. Powell’s seemingly innocuous “long way from neutral” comment on 10/3/18, we find it constructive to parse cautious nuggets in Chair Powell’s copasetic narratives.

Along these lines, Chair Powell seemed to imply from the Dallas stage a subtle downshift in telegraphed Federal Open Market Committee (FOMC) tightening in stating “we have to be thinking about how much further to raise rates and the pace at which we will raise rates.” After referencing potential headwinds of slowing growth abroad, fading fiscal stimulus and lagged effects of eight Fed hikes, Chair Powell eventually narrowed in on one specific area of growing Fed concern: excessive corporate leverage. In Mr. Powell’s soft-spoken words, “There is some significant corporate borrowing and we have our eyes on that.” Having subsequently refreshed our focus on U.S. corporate debt levels, we can only characterize Chair Powell’s matter-of-fact depiction as dramatic understatement.

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