What the Fed Will Do Next... and What It Means for You

[Inside Wall Street with Nomi Prins]( Welcome to Inside Wall Street with Nomi Prins! It’s the only daily newsletter featuring the insights of Nomi Prins and her team of global experts. You’ll find all our issues [here](. And if you have questions or comments, shoot us a note anytime [here]( or at feedback@rogueeconomics.com. What the Fed Will Do Next… and What It Means for You By Nomi Prins, Editor, Inside Wall Street with Nomi Prins The Russian assault on Ukraine continues to wreak havoc – both on the people of Ukraine and on financial markets around the world. With geopolitical tensions escalating, stock markets opened the week in solid red territory. Notable exceptions were oil and other commodity-related names. Then came word from the White House on Tuesday that the U.S. would indeed refuse Russian oil imports. And we heard that Ukraine was ready to reach a compromise with Russia. Markets rebounded. But they remain in choppy territory, as these geopolitical events are still unfolding. Investors are counting on gold as a protector and store of wealth. Gold is up nearly 10% since the start of the year on growing fears of Putin’s intentions towards Ukraine. Against this backdrop, the Federal Reserve has a critical meeting next week. The decisions it makes will determine whether the markets have a Hail Mary coming to them. Let me explain what I mean by that. Recommended Link [Millionaire Trader: “Tech Stocks Are Overrated, Do THIS, Instead”]( [image]( Buying Tesla, Apple, Amazon, Bitcoin, or anything else – right now – is a DEVASTATING financial mistake. One of America’s #1 trading millionaires has joined the ranks of the top 1% of wealthy… by IGNORING 99% of the entire stock market. Because within the 6,000 different stocks on the market to choose from…Hides ONE very special stock. He calls it, “The One Stock Retirement” because it’s been used for years (through ANY market condition) to catapult his wealth – closing gains like 373%, 228%, and more – time and time again. Collecting 37-YEARS of normal market gains… in just 8 days. [Today, he’s demonstrating this trade and revealing the ticker, click here to watch.]( -- Fed Bends Under Pressure From Markets The Fed’s two-day policy meeting, the Federal Open Market Committee (FOMC), takes place on Tuesday and Wednesday next week. At these meetings, it usually announces any interest rate adjustments it has planned. I’ve been observing and explaining how the Fed operates for more than three decades – since my years on Wall Street. And in 2015, I was invited to address global central bankers at the annual Federal Reserve/International Monetary Fund (IMF)/World Bank conference in Washington. At the time, the Fed had not raised interest rates since the financial crisis of 2008. But it was signposting three to four rate hikes to come. The other central bankers were afraid of what that could mean for them. At a luncheon that day, Christine Lagarde, head of the IMF, articulated their fears. In my address, I said I did not think the Fed would raise rates that many times. In the end, it only raised rates once. I wrote my book Collusion to explain why it backed down. Naturally, I have some thoughts on what the Fed will do at next week’s meeting. I’ll share those with you today. And early next week, I’ll explain what the Fed’s decisions could mean for your money. But first, let’s talk about what the Fed will likely announce next week… and why. [Featured: Disturbing footage from inside retail super chain (not Walmart)]( The Fed’s Announcements Will Be Tame We have already received a very big clue… After the January FOMC meeting, Fed chair Jerome Powell said that a 50-basis-point rate hike was on the table. But that was before Russia invaded Ukraine. And it was before the world slapped financial sanctions on Russia’s banks and central bank. Last Wednesday, Powell made a rare pre-meeting announcement. In his scheduled semi-annual testimony to Congress on monetary policy, the man behind the money said, “I am inclined to propose and support a 25-basis-point rate hike.” Powell said the sanctions imposed on Russia and Russian banks in an attempt to stall its invasion of Ukraine could provoke a reshaping of Western economies. He said the Fed “will proceed carefully as we learn more about the implications of the Ukraine war for the economy.” The U.S. dollar has risen against other currencies since the financial sanctions were announced in the last couple of weeks. Investors are scrambling for safety. And the U.S. dollar is seen as a safe haven by foreign investors. But if the Fed raises rates too much, those dollars will become too expensive for its allies. That means next week’s FOMC meeting will likely bring an announcement of a 25-basis-point rate hike. I don’t expect anything more than that. Back in January, long before the Russian invasion of Ukraine, we[said that was the most likely scenario](. The rest of the market now agrees. Market consensus sees a 95% probability of a 25-basis-point hike. It sees the probability of a 50-basis-point rate hike as just 5%. Recommended Link [Is the chip shortage over?]( [image]( One company will play a major role in ending the global chip shortage. And legendary tech investor Jeff Brown says it’s his choice as the Most Important Microchip Stock of the Decade. [Click here to get the name and ticker symbol for FREE.]( -- We’ve Seen This Movie Before We’ve been down this road of the Fed saying one thing and doing another before. On December 16, 2015, the Fed raised interest rates by 25 basis points (0.25%). And it forecast four rate hikes for 2016. But the markets freaked out at even the possibility that money would get more expensive. They were fixated on zero percent interest rates. So the Fed stepped back. We got one rate hike – in December 2016. And in 2018, when Jerome Powell said interest rate hikes were on “automatic pilot,” the S&P 500 plunged 20%. The Fed swiftly softened its stance. It decreased rates three times in 2019. [Featured: WARNING: Shocking new trend ripping through America]( Stock Markets and Cheap Money Go Together But now, times are different. The latest U.S. inflation reading was released this morning. It is now at 7.9% – its highest level since January 1982. That gives the Fed a reason to hike rates. Of course, the situation in Ukraine mitigates that reason. It’s not like the Fed wants war. But war offers it a convenient reason to keep rates low. And the market will be happy about this. It likes cheap money. There are two main reasons why… - When rates are low, investors look for places to put their money that return more than savings accounts or U.S. Treasury bonds. The stock market is such a place. - Cheap money is to markets what a pacifier is to a baby. That’s the case even when uncertainties abound. Fears of a 50-basis-point rate hike laid the groundwork for recent market volatility. That enabled other events from inflation to Ukraine to compound it. All three major U.S. stock indices are down since the start of the year. The Nasdaq Composite index has dropped 16% since January 3. That puts it squarely in correction territory (a drop of more than 10%) since then. The S&P 500 is down 11%. And the Dow is down 9%. U.S. markets rallied after Powell’s calming announcement last Wednesday. But they wobbled on reports of intensifying violence in Ukraine to close the week. They opened this week down and then rebounded, as I mentioned above. Amid such volatility, the Fed won’t want to shock the markets with more than a 25-basis-point hike right now. And the possibility of a 50-basis-point hike is remote in the current environment. There is even a slight chance the Fed won’t hike rates at all. It depends how bad things get in Ukraine. I’ll explore these scenarios further in the second part of this essay next week. This discussion will set up our expectation for what will happen in the markets after the March FOMC meeting. Recommended Link [Last Chance // New Prediction // #1 Crypto to Buy Now]( [image]( In this new broadcast, recorded live in Miami… Teeka Tiwari — the man voted the #1 Most Trusted Crypto Expert — reveals his #1 MUST-OWN CRYPTO today. Teeka has a history of making winning predictions… - Teeka recommended both Bitcoin and Ethereum — before they shot up as much as 170X and 480X higher… - In 2017, he pounded the table on a lesser-known crypto coin trading for just 13¢. It went on to soar 1,500X higher — in 11 months. - He’s identified the #1 returning crypto every year since 2016… - And Teeka’s recommendations have returned 281% on average since 2016 — 14X better than Warren Buffett... But in this new video, Teeka reveals what could be his most important prediction yet. [WATCH TEEKA’S URGENT VIDEO NOW (#1 Crypto to Own Now Revealed FREE).]( -- Uncertainty Can Create Opportunity But for now, you can rest assured that, no matter what the Fed announces next week, the stock market will eventually resume its upward climb. That’s because of the [permanent distortion]( between the markets and the real economy I’ve been telling you about. As long as money remains relatively cheap, markets will continue to inhale it. And that will elevate prices. But there will be volatility to contend with along the way. The ongoing situation in Ukraine, rising inflation, and uncertainty around the Fed’s plans guarantee that. I see this period of Fed policy uncertainty as a strategic buying opportunity in the midst of other global turbulence. Next week, I’ll give you a strategy to protect and grow your wealth in these uncertain times. So look out for that in your inbox early next week. Happy investing, and I’ll be in touch again soon. Regards, [signature] Nomi Prins Editor, Inside Wall Street with Nomi Prins --------------------------------------------------------------- Like what you’re reading? Send your thoughts to [feedback@rogueeconomics.com](mailto:feedback@rogueeconomics.com?subject=RE: What the Fed Will Do Next… and What It Means for You). --------------------------------------------------------------- MAILBAG This reader enjoyed [Nomi’s recent piece on the rising cost of food]( and has an idea for how to combat it… Hi Nomi, I enjoy your column. You advocate for saving money on food (city girl?). You forgot to mention growing your own food. It's not for everyone, but most can grow it, even on their balconies. – Roger M. What other ways are you saving money and combating rising food and gas prices? What do you think the Fed will announce at its meeting next week? Write us at [feedback@rogueeconomics.com](mailto:feedback@rogueeconomics.com?subject=RE: What the Fed Will Do Next… and What It Means for You). IN CASE YOU MISSED IT… [You Could Lose 90% of Your Savings When the Rubber Hits the Road]( Soon a deadly economic force could drive the price of tires from $120… to $1,200 PER TIRE! Few people alive today have seen this force before… Yet each of the 30 times it struck throughout history… Once-upstanding citizens, with plenty of money, were thrust into poverty. [Follow this simple action plan]( — and you’ll be able to protect your family. You could even emerge from this crisis much richer than you are right now. 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