Re: Trump nominates Kevin Warsh as US Fed Chairman;
Fwiw, I'm not a subscriber to the Arora Report but here's their view on the subject.
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Fed Chair Please click here for a chart of gold futures (GC_F).
Note the following:
- The chart shows yesterday gold had a $5.5T swing. This is an extraordinarily large swing.
- Retail momo crowd was going all in in gold ETF (GLD) and silver ETF (SLV) in the early morning before the major drop. When retail buying was exhausted, that is when gold fell.
- The chart shows gold bulls aggressively bought the dip.
- The chart shows when speculation started building last night that President Trump would nominate Kevin Warsh as the next Fed Chair.
- The chart shows persistent selling after the Warsh speculation started.
- The chart shows selling in gold has continued after President Trump announced Warsh as his pick for the next Fed Chair.
- As shown on the chart, gold is experiencing extreme volatility, but the volatility in silver is even more dizzying. In one day, silver futures have traded in the range of $95.12 – $118.45, i.e. 24.5%.
- Before reading the following, it is worth a reminder that the Arora Report is politically agnostic. Our sole job is to help investors.
- Irrespective of your opinion of President Trump, in The Arora Report analysis, President Trump picking Warsh is a brilliant move. Some see the pick as a contradiction because Warsh has a history of being ultra hawkish, and President Trump is ultra dovish. In The Arora Report analysis, there is no contradiction, just pure, strategic brilliance for President Trump to get interest rates lower. The reason is FOMC has 19 members and only 12 vote. A vast majority of the members are not going to go along with President Trump’s desire to significantly lower interest rates. The Fed Chair has only one vote and thus cannot accomplish dovish policy unless he succeeds at persuading other members. The brilliance is a Fed Chair who is an ex-hawk has more credibility and a better shot at convincing other FOMC members to lower interest rates.
- At one time, there were many contenders for the Fed Chair job. Before the list was narrowed to four, The Arora Report shared in a podcast in Arora Ambassador Club that indications pointed to Kevin Warsh as the lead candidate. The podcast addressed why Kevin Warsh might be picked. Of note is that the Arora Report never did a podcast on any other candidate for Fed Chair.
- Producer Price Index (PPI) came hotter than expected. Here are the details:
- Headline PPI came at 0.5% vs. 0.2% consensus.
- Core PPI came at 0.7% vs. 0.3% consensus.
- As an actionable item, the sum total of the foregoing is in the Arora Protection Band, which strikes the optimum balance between various crosscurrents. Please scroll down to see the Arora Protection Band. The Arora Protection Band is one of the large number of unique edges that are available to members of The Arora Report.
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