In this week's Off The Cuff podcast, Chris and Axel Merk discuss:
- Contagion Risk
- Where will the Emerging Markets melt-down end?
- Inflation On The Rise
- Now cresting above 2%
- More Fed Rate Hikes Coming
- Not yet priced into the market
- Gold/Silver Ratio
- What is today's extreme level telling us?
Recorded last week, Axel — who has close access to Federal Reserve insiders — explains why he predicts the Fed will hike rates higher than the market currently expects:
One thing that's different from 2015 is that inflation is picking up in earnest. We see that in all kinds of things.
We monitor inflation in a gazillion different ways. There's two different types of co-inflation in the U.S.. One is the core CPI, and then the thing that the Fed really wants to watch is PCE. Core CPI is above 2% now. Core PCE is just about hitting 2%. And there's not a backdrop of a fiscal stimulus; we still live on the monetary side and on the fiscal side.
When you have that sort of thing, inflation is going to move higher. That means the Fed is going to march higher, quite likely unless disaster strikes somehow, somewhere. And now, already, the "risk-free rate," the Fed funds rate, is already at a level where some people are saying "Well, what the hell am I doing in emerging markets when I can get an OK rate of return on cash?"
Your bank might not give it to you, but you can buy Treasury bills.
by richcabot