Jesse Felder: Fed Reversing Course Will be Magic for Gold

Tom welcomes Jesse Felder. Jessie is the founder, editor, and publisher of The Felder Report.

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Jesse explains Warren Buffets' metrics for measuring the size of the overall equity markets. Markets are currently thirty to forty percent higher when compared to that of the Dot.Com bubble. Equities have never been this highly valued relative to the overall economy.

Jesse explains how the Hindenberg Omen acts as an indicator for a market top and that a reversal appears likely. The smartest of the smart money appears to be exiting the market. Investors should be relatively cautious.

The Fed is looking to reverse monetary policy and that could bring a real risk of a bear market. Investors are overly complacent.

Jesse notes that some sectors are completely overlooked and undervalued. Investors are ignoring brick and mortar companies. In a correction, we could begin seeing rotation of funds to these other sectors.

When a large correction occurs there will likely be a point where the Fed will intervene. That point is probably when the Fed forecasts direct damage to the economy. A big drop in markets can have quite a psychological impact on spending by the public.

Copper acts as a leading indicator for inflation and has been signaling rising inflation for over a year. Should copper stop consolidating and break out to the upside again in a dramatic way would be a clear sign of loss of control by the Fed and of further inflation.

Energy is also likely to move higher while creating further inflationary pressure. Fossil fuels are certainly going to be necessary for the foreseeable future. Should the dollar reverse course both energy and gold would likely move much higher. Many energy equities continue to be incredibly cheap. So far the Fed has done nothing in terms of following up on their plans.

He says, "For those of us that are willing to put some thought into our trades there exists tremendous opportunity."

Lastly, Jesse discusses the value of structural momentum analysis.
Time Stamp References:
0:00 - Introduction
0:36 - Equity Valuations
4:14 - Hidenberg Omens
8:39 - Fed & Correction
11:32 - Complacency & Risk
13:49 - Sector Rotation
16:40 - Powell Pivot Point
18:13 - Wealth Effects
20:19 - Dr. Copper & Inflation
26:45 - Energy & Input Costs
29:35 - Energy & Equities
31:32 - Growth To Value?
34:40 - Gold & The Fed
37:40 - Dollar Strength
39:00 - Inflation Hedges
44:20 - Michael Oliver
49:08 - Sell-Side Discipline
51:55 - Wrap Up

Talking Points From This Episode
- Measuring the size and valuations of the equity markets.
- Equity risks and how will the Fed react.
- Copper continues to signal further inflation.
- Momentum analysis and benefits of using sell-side discipline.

Guest Links:
Twitter: https://twitter.com/jessefelder
Website: https://thefelderreport.com/
Article: https://thefelderreport.com/2022/01/19/dr-copper-will-be-the-feds-arbiter-of-inflation-truth/

Jesse Felder is the Founder, Editor, and Publisher of The Felder Report. He began his professional career at Bear, Stearns & Co. and later co-founded a multi-billion-dollar hedge fund firm headquartered in Santa Monica, California. Since moving to Bend, Oregon in 2000 and founding The Felder Report shortly thereafter his writing and research have been featured in major publications and websites like The Wall Street Journal, Barron's, Yahoo!Finance, Business Insider, RealVision, Investing.com, and more. Jesse also hosts and produces the Superinvestors and the Art of Worldly Wisdom podcast.