The Fed just cut rates to 4.5%-4.75%, but the real story isn’t about numbers – it’s about how the Fed’s job just got a lot more difficult.
It’s about power, independence, and a looming showdown between a president known for demanding loyalty and a Fed chair determined to maintain independence…
Powell Stands Firm on Fed Independence
While Powell insists on keeping rates “restrictive,” he’s walking a tightrope with monetary policy. As he puts it, the Fed needs to “steer between moving too quickly and moving too slowly” when adjusting rates.
Enter Donald Trump, whose return to the White House adds another wrinkle to the Fed’s challenges. We’ve been here before – during Trump’s first term, he wasn’t shy about pushing Powell to adjust rates, often taking to public platforms to make his demands known.
It appears Powell isn’t backing down though. He’s said the Fed will stay independent, even stating he won’t resign if asked. With Trump advancing policies that many economists say could push inflation higher, the stage seems set for some serious tension between the central bank and the White House.
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$20B Stock Surge: Markets React to Election
Trump’s election victory sparked a historic day for US markets, with $20 billion flooding into equity funds – the largest single-day inflow since June. Combined with the Fed’s rate cut, this surge helped push the S&P 500 toward its best weekly performance in a year.
Metals Cool Off as Markets Digest Election Results
Gold and silver prices have retreated from recent highs, experiencing their sharpest weekly decline in months. Gold has fallen approximately 5% from its peak above $2,800 earlier this month, currently trading around $2,690.
Silver has seen an even steeper drop, declining over 9% from its recent approach to $35 per ounce, now priced around $31.40.
Despite this pullback, both precious metals have remained in positive territory over the past month.
Market Perspective: What’s Next?
So, what’s happening? Markets are adjusting to both Trump’s victory and the Fed’s latest move.
The result? Gold’s down 5%, silver’s down 9%. But here’s the thing about market dips – they often create opportunities for patient investors.
Think about it: When your favorite assets go on sale, do you run away? Or do you recognize the opportunity to strengthen your position at better prices?
The fundamental case for precious metals hasn’t changed. What has changed is the entry point – and that might be worth your attention.
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Until next time,
Brandon S.
Editor
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