You are a free subscriber to Me and the Money Printer. To upgrade to paid and receive the daily Capital Wave Report - which features our Red-Green market signals, subscribe here. Powell Just Told You Everything: A Breakdown of That Speech...Position for the 1970s... not the 1930s...
Dear Fellow Traveler: I’ll run my No. 1 interview article tomorrow. Instead, let me show you some Kung-Fu market analysis and journalism with a really detailed recap of Powell’s speech in record time… I read Powell’s speech before he was even finished… and my advice… Prepare for stagflation. They are taking the 1970s path over the 1930s path. Buy what I’ve discussed… The Hedge of Tomorrow… and the things for the next 36 months… Those links are at the bottom. But first… a review of Jerome Powell’s unbelievable retreat on policy… They’re Flying BlindThe Fed Chair started flat-footed. If this was a boxing match, he’d have been on the canvas in the first two minutes. In his speech, Jerome Powell admitted: "In this environment, distinguishing cyclical developments from trend, or structural, developments is difficult." That's Fed speak for… "We can't tell if these changes are temporary or permanent." The Fed can't distinguish cycles from structure. Powell’s admitting their models are broken. The labor market proves it. Powell said job growth "slowed to an average pace of only 35,000 per month over the past three months, down from 168,000 per month during 2024." But unemployment sits at 4.2%, "broadly stable over the past year." How? As I said… If the labor market had a participation rate similar to where we were not too long ago… it’d be moving toward 5%. As Powell tried to explain: "Labor supply has softened in line with demand" due to "the sharp falloff in immigration." Got that? When both supply and demand collapse together, you get fake stability. It looks balanced, but it's actually fragile. Tariff TroublesThe concerns around tariffs are here… Powell confirmed: "The effects of tariffs on consumer prices are now clearly visible." Core goods went from deflation to 1.1% annual inflation. Powell called this "a notable shift from the modest decline seen over the course of 2024." His hope? "A reasonable base case is that the effects will be relatively short-lived… a one-time shift in the price level." But he immediately hedged… because that’s what this guy does… He said: "It is also possible, however, that the upward pressure on prices from tariffs could spur a more lasting inflation dynamic." They’re choosing higher inflation over labor insecurity… But the translation is this… We're hoping it's transitory. They’re hoping the stagflation isn’t permanent… Sound familiar? The Framework RetreatThe Fed also officially killed its 2020 framework. This is significant… Powell said they "returned to a framework of flexible inflation targeting and eliminated the 'makeup' strategy." Why? Powell admitted that their promise of moderate inflation overshot… constantly. "There was nothing intentional or moderate about the inflation that arrived," he said. No shit… Bud. They also removed "shortfalls" language about employment because it "was not always interpreted as intended." This means their clever framework confused everyone, including them… They’re lost. The Balancing ActPowell's key admission was about inflation… "In the near term, risks to inflation are tilted to the upside, and risks to employment to the downside, a challenging situation." With the Fed funds rate still in "restrictive territory," Powell said "the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance." This means that they will cut rates even with inflation above target because they're concerned about the labor market. They capitulated… Powell described the labor market as "a curious kind of balance that results from a marked slowing in both the supply of and demand for workers." "Curious" is Fed speak for "we don't understand this." GDP growth collapsed to 1.2% in H1 2025 from 2.5% in 2024. Consumer spending is cratering. But inflation's still running at 2.9% core. They are bad at their jobs. Now What?Powell's trapped. Inflation's above target with visible tariff pressure. Employment is weakening in ways their models can't explain. They abandoned their framework because it failed. He'll ease not because it's right, but because NOT easing risks something breaking in this "curious" labor market. What do you do now? Position for stagflation. Just as I’ve been saying… It’s all here and free at TheoTrade. Go back to my Hedge of Tomorrow article… Buy gold. The Fed just told you they'll tolerate above-target inflation to prevent employment collapse. They're choosing the 1970s over the 1930s. That’s all. Stay positive, Garrett Baldwin About Me and the Money Printer Me and the Money Printer is a daily publication covering the financial markets through three critical equations. We track liquidity (money in the financial system), momentum (where money is moving in the system), and insider buying (where Smart Money at companies is moving their money). Combining these elements with a deep understanding of central banking and how the global system works has allowed us to navigate financial cycles and boost our probability of success as investors and traders. This insight is based on roughly 17 years of intensive academic work at four universities, extensive collaboration with market experts, and the joy of trial and error in research. You can take a free look at our worldview and thesis right here. Disclaimer Nothing in this email should be considered personalized financial advice. While we may answer your general customer questions, we are not licensed under securities laws to guide your investment situation. Do not consider any communication between you and Florida Republic employees as financial advice. The communication in this letter is for information and educational purposes unless otherwise strictly worded as a recommendation. Model portfolios are tracked to showcase a variety of academic, fundamental, and technical tools, and insight is provided to help readers gain knowledge and experience. Readers should not trade if they cannot handle a loss and should not trade more than they can afford to lose. There are large amounts of risk in the equity markets. Consider consulting with a professional before making decisions with your money.
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