What Will Come of The Fed's Meetings?

What Will Come of The Fed's Meetings?

Wall Street's leading indices ended lower on Tuesday, as data showing more substantial inflation and weaker U.S. retail sales in May unnerved investors who were already jittery as they await the results of the Federal Reserve's latest policy meeting.

Assurance from the Fed that rising prices are transitory and falling U.S. Treasury yields have helped ease some concerns over inflation and supported U.S. stocks in recent weeks. All eyes are now on the central bank's statement at the end of its two-day policy meeting on Wednesday. Gold and Silver have taken a step back the last few trading days to anticipate what the Fed comes out and says.

Data showed an acceleration in producer prices last month as supply chains struggled to meet demand unleashed by the reopening of the economy. A separate report showed that U.S. retail sales dropped more than expected in May. They have managed to stay calm and convince what seems like most folks that Gasoline is rising over 30% and lumber up over 230% that it is growing pains that will end shortly.

There was a bit of a reaction to the economic data we got a late week. Instead, the numbers were inflated themselves or not is up for a separate debate; however, for the most part, it shows that the economy is starting to wean itself off stimulus, the recovery is slowing down a little, and inflation is continuing to grow

We see some very modest weakness, and it will be choppy leading up to the Fed decision. Right now, the Fed is probably in a position to show they are thinking about tapering down the stimulus, but they are still a long way from actually doing it.

In August or September, the Fed is likely to announce a strategy for reducing its massive bond-buying program but will not start cutting monthly purchases until early next year, and that is not for sure as the left will continue to print us to death are able.

The benchmark S&P 500, the blue-chip Dow Jones, and the tech-focused Nasdaq have all gained so far this year, primarily driven by optimism about an economic reopening and the simple fact that even the millions of American's unemployed are making more money now than any other time in many of their lives. Nevertheless, we have economists scratching their heads trying to figure out why they do not want to go back into the labor force.

The majority of the 11 major S&P sectors have slipped. The energy index rose as oil prices hit multi-year highs on a positive demand outlook. The communication services sector ended lower, having hit a record intraday high earlier in yesterday's session.

We have bitcoin making a sharp rise over the last four days as Elon Musk sends out another Tweet that investors are looking at as highly bullish. Governor Greg Abbott down here in Texas declared Texas a "Crypto Friendly" state. However, I can not tell you exactly what that entails as no specific details were given. There might be some volatility in the metals market over the next day or so; however, the markets are not going to like the Fed beginning to taper us off of the steroids we have grown accustomed to.

I am still predicting $35 an oz Silver and $2,300 Gold by the end of the year. I am still highly conservative when you look at everything bullish that comes into play. If you have not already, Makes sure to put 5-10 % of your portfolio into metals while this dip lasts because one thing I can assure you is that it will not last long before metals start skyrocketing up again.

Mike White

(CEO at Goldpro, LLC )