Category: Gold Price

Buy Gold As Strategic Hedge – World Gold Council


KitcoNews/David Lin/12-18-17

Gold should be seen as a strategic asset that investors use to weather the storm, says Juan Carlos Artigas, Director of Investment Research at the World Gold Council.

Artigas told Kitco News that gold, as an insurance, should be consistently held in a portfolio and not bought only when there is an equities market correction. “If you look at history, you’ve seen these [equities] corrections happen.

If you wait until the last minute to protect your portfolio from that correction, you may actually miss it,” he said.

PG View: In fact, the quiet periods in between stock market corrections and periods of economic duress are the ideal time to be accumulating gold.

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Morning Snapshot: Gold Remains Firm as Tax Reform Moves Down the Homestretch

USAGOLD/Peter Grant/12-20-17

Gold is up modestly in early U.S. trading, establishing fresh 2-week highs. A softer dollar is helping to keep the yellow metal underpinned, despite continued buoyancy in stocks and yields as the tax bill moves down the homestretch.

Despite the impending legislative win on tax reform, the U.S. faces a government shutdown at the end of the week. There is little hope that Congress will pass a budget before midnight on Friday, so they will likely try to pass another stopgap funding measure that will kick the can into the new year.

With Democrats perhaps feeling a little stung from the tax reform process, they may be a less amicable on the budget negotiations. The resulting uncertainty may be contributing to recent gains in gold.

The U.S. calendar is light today with existing home sales and EIA crude inventory.

Silver is up at 2-week highs as well, trading comfortably back above $16 and near the 38.2% retracement level of the decline from the mid-November high. A rise above 16.50 would further ease pressure on the downside.

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Gold better at 1265.20 (+3.14). Silver 16.22 (+0.06). Dollar and euro steady. Stocks called higher. U.S. 10-year 2.49% (+2 bps).

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Gold Prices Inch Lower Ahead of Tax-Bill Vote

WSJ/Amrith Ramkumar & Christopher Alessi/12-19-17

Gold prices were slightly lower Tuesday, closely tracking the dollar ahead of a House of Representatives vote on a tax-overhaul bill.

…Gold prices are back near their November trading range, up nearly 10% for the year but roughly 6.5% off their year-to-date highs from early September.

Analysts have said geopolitical uncertainty and hesitation among Fed officials about a gradual pace of interest-rate increases could continue to support gold prices. Many investors favor gold and other haven assets when they believe markets might turn rocky.

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Gold holds firm as dollar wilts ahead of U.S. tax vote


Reuters/Jan Harvey/12-19-17

Gold held firm above $1,260 an ounce on Tuesday as caution over the passage of sweeping tax legislation in the United States weighed on the dollar, supporting the precious metal after two days of gains.

But moves in the metal were muted, as market players were wary of taking new positions before the holiday season. Gold is on track to post its narrowest trading range of any quarter in a
decade in the last three months of the year.

PG View: I would suggest that the narrow trading range in Q4 reflects the resilience of gold in the face of record stock gains, Fed interest rate hikes and a somewhat firmer dollar. The market may be “coiling” in advance of a breakout, which typically comes in the direction of the underlying trend. The trend for the year is up.

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Morning Snapshot: Gold Remains Firm Ahead of House Vote on Tax Bill

USAGOLD/Peter Grant/12-19-17

Gold is up slightly as markets awaits today’s anticipated House vote on tax reform legislation. In the mad scramble to get this piece of legislation to the President’s desk before the end of the week, the market seems to be ignoring the fact that the current short-term spending bill expires on December 22.

While neither party seems to have the stomach for a government shutdown, the window to get something done before the Christmas recess begins is small. Continually kicking the can with short-term continuing resolutions is no way to run a government, and yet this seems to be the only way to avert a government shutdown these days.

The inability of the dollar to build on last week’s bounce is helping to underpin gold. Meanwhile, stock market gains associated with an expectation of impending corporate tax cuts, have limited the upside for the yellow metal.

Rising geopolitical tensions are also seen as supportive to gold. The U.S. has blamed North Korea for a cyber attack earlier this year. Meanwhile, National security adviser H.R. McMaster said he doesn’t think the U.S., nor the world, can “tolerate” the risk of a nuclear armed DPKR.

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Gold better at 1262.36 (+0.70). Silver 16.17 (+0.03). Dollar lower. Euro higher. Stocks called mixed. U.S. 10-year 2.42% (+3 bps).

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Get Ready, Gold Showing Signs It’s headed to $1,700 or Higher – Analyst

KitcoNews/Daniela Cambone/12-18-17

…”The last three days have reconfirmed by commitment for a much higher gold price in 2018. We are making higher lows for the year – the recent behavior made me nervous, but something very telling happened in the last three days,” Lanci said in an interview on Thursday.

“On Tuesday we had a short covering rally. And Wednesday there was a 10,000 contract increase in December – that’s very unusual, that is an over 2.3% increase in open interest,” Lanci explained. The point Lanci stresses is that gold is now back in a “safe area” between $1250-$1275 an ounce. “The $1,700 call I believe in is going to come to fruition- [if gold gets] above $1275 I will double down on a momentum bet.”

PG View: Lanci has made note of the cyclical pressures that have lifted gold and believes they will come to bear in a more significant way in 2018.

As an aside, Lanci see the marketing of bitcoin as the new digital gold as a “disaster waiting to happen.”

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The Daily Market Report: Gold Rises, Despite Surging Stocks


USAGOLD/Peter Grant/12-18-17

Gold is up, having established a 7-session high at 1263.97. A breach of minor chart resistance at 1264.10 would favor a short-term challenge of the 200-day moving average 1268.83.

This is a critical week for the GOP and the Trump administration. Tax reform is expected to be voted on early this week with the plan to deliver the bill to the President’s desk before the Christmas recess. However, the budget and debt ceiling issue has to be dealt with before December 22 as well.

A partial government shutdown may hang in the balance, although neither party seems inclined to press the issue. Consequently, we may see that can get kicked into the new year.

One thing is certain, the debt ceiling is going to have to rise. The tax bill is expected to add the maximum $1.5 trillion to the national debt over the next decade. However, that may be conservative based on perhaps too optimistic growth projections.

With the Fed both raising rates and tapering their balance sheet, the cost of financing the massive and growing debt are likely to rise as well. That is going to provide an additional headwind to those growth prospects.

Consumer debt exceeded the $1 trillion milestone earlier this year, but MarketWatch contends more consumer debt is “One sure-fire prediction for 2018.” Perhaps not surprisingly, delinquencies are expected to rise in the year ahead as well. This is another significant impediment to growth.

Despite the risks, stocks love the prospects for tax cuts. However, I’m wondering if this will end up being a classic case of ‘buy the rumor, sell the fact.’ Yale economist Stephen Roach cautions that “the CAPE ratio has been higher than it is today only twice in its 135-plus year history – in 1929 and in 2000. Those are not comforting precedents.”

The implication of course it that stocks are really overvalued and we know what happened in 1929 and 2000. A little portfolio balancing into year-end, seems like a prudent strategy.

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Gold extends rally as dollar wobbles, but stock gains keep metal in check


MarketWatch/Rachel Koning Beals/12-18-17

Gold futures ticked higher Monday as the dollar index slipped, building slowly on what was the yellow metal’s first weekly gain in a month last week.

…The dollar slipped against most other major currencies, with the ICE Dollar Index DXY, -0.56% down 0.3% at 93.70. The greenback advanced on Friday on increased optimism the Republican tax bill will get approved before Christmas. Gold typically moves inversely to the dollar and stocks, as investor appetite for riskier assets tends to lure investors away from the haven of gold.

Accordingly, gold’s upside Monday was held in check in part as risk-on investment sentiment persisted, leaving major stock indexes on track for new records. Such optimism was the result of tax-policy progress. Speaking on several Sunday talk shows, Treasury Secretary Steven Mnuchin said he has “no doubt” that the GOP’s tax bill will make it to the desk of President Donald Trump this week.

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Gold ticks higher as nerves over U.S. tax bill hit dollar

Reuters/Eric Onstad/12-18-17

Gold edged higher on Monday as uncertainty over U.S. tax reform weighed on the dollar, while an analyst said bullion may face renewed headwinds early next year.

…”If the whole thing (tax reform) falls apart at the last minute, it would be hugely positive for gold, but I think that is unlikely,” said analyst Carsten Menke at Julius Baer in Zurich.

If the tax bill passes, gold might dip slightly, but that scenario is largely priced in the market, he added.

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Morning Snapshot: Gold Firms As Congress Pushes to Pass Tax Deal, Faces Shutdown

USAGOLD/Peter Grant/12-18-17

Gold is up in early U.S. trading, buoyed by a weaker dollar. The rise in the yellow metal comes despite continued gains in shares and firmer yields, as cyclical forces seem to have taken hold.

The stock market is eagerly anticipating final passage of the GOP tax bill early this week, despite swirling doubts about the positive economic impact of the legislation and a certainty that the debt level is going to rise. Congress also needs to pass a budget agreement and address the debt ceiling this week, or face a partial government shutdown.

While the tax bill can get passed without any support from Democrats, the budget/debt ceiling agreement is going to require at least a little bipartisanship. The more likely scenario is that they kick-the-can yet again with another short-term deal.

Silver is back above $16, but remains comparatively soft. However, there is a growing recognition that silver is quite undervalued relative to gold. Kitco reported late last week that “both TD Securities and Bank of Montreal came out and said that they see silver prices pushing to $20 an ounce next year.”

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Gold higher at 1259.57 (+4.51). Silver 16.10 (+0.05). Dollar lower. Euro higher. Stocks called higher. U.S. 10-year 2.37% (+2 bps).

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The Daily Market Report: Gold Poised for First Weekly Gain in Four


USAGOLD/Peter Grant/12-15-17

Gold is up modestly, having given back more significant gains seen earlier in the session. However, the yellow metal still appears to be on track for its first weekly gain in the last four.

News that some last-minute concessions were being made on the tax bill to win the support of GOP holdouts, helped the dollar recover intraday, knocking gold off the highs for the week.

The final version of the tax bill is expected to be made public later today. Given that the plan is not terribly popular with the general public, perhaps it’s not surprising that it will drop late on a Friday. Congress would then likely vote next week and get the bill to the President before the Christmas recess.

Congress is also going to have to come up with another temporary spending measure and kick the can on the debt ceiling on or before December 22 as well. The tax bill is expected to add the maximum $1.5 trillion to the national debt over the next 10-years.

However, it may prove to be much more than that if tax cuts fail to spark the fast growth that proponents are anticipating. As noted in this morning’s Snapshot, the Fed’s economic forecasts that came out earlier in the week, reflect some serious doubts.

While the central bank now projects 2.5% GDP in 2018, they see the pace of growth moderating to 2.1% in 2019 and 2.0% in 2020. The Fed kept their long-term growth forecast steady at 1.8%.

The Fed definitely tends to be pretty optimistic on their forecasts. However, their forecasts suggest they see the fiscal impact of the first major tax overhaul in more than 30-years as negligible and short-lived.

Without any significant and sustainable fiscal stimulus, the onus is going to fall right back on the Fed to support growth with easier monetary policy. In other words, the tightening cycle that began a year ago may have to be paused again, or perhaps even reversed.

That realization would weigh on the dollar, boosting gold in the process. The yellow metal needs to climb back above the 200-day moving average (presently around 1268.52) in order to ease near-term pressure on the downside. At that point, renewed tests above $1300 would become likely.

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Gold edges up as dollar slips on U.S. tax bill worries


Reuters/Apeksha Nair/12-15-17

Gold edged higher in Asian trade on Friday, heading for their first weekly gain in four, as the dollar sagged on concerns about the progress of U.S. tax reform.

“The U.S. dollar is weakening a little and that’s benefiting gold,” said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

…President Donald Trump’s efforts to win passage of a sweeping tax bill in the U.S. Congress hit potential obstacles when two more Republican senators insisted on changes, joining a list of lawmakers whose support is uncertain.

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Morning Snapshot: Gold Recovery Continues

USAGOLD/Peter Grant/12-15-17

Gold is up in early U.S. trading, buoyed by a softer dollar and appears poised to record its first weekly gain in the last four. This is a good initial indication that the pattern that has emerged in recent years, where gold bottoms late in the year and rallies into the new year, is set to repeat.

Fresh doubts about whether the reconciled tax bill has the votes to clear Congress is stoking political uncertainty. While the Fed now sees GDP rising to 2.5% in 2018, they see it tapering again to 2.0% by 2020. The long range forecast remains steady at 1.8%, raising doubts that the tax bill will “pay for itself.” as the backers claim.

The GOP is trying to get the legislation passed before the new Democrat Senator from Alabama can get seated, which would further narrow the already razor thin advantage Republicans holds in the upper chamber. If the tax measure fails to get to the President’s desk by year-end, stocks would likely reverse, which would push gold back toward $1300.

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Gold higher at 1261.31 (+7.56). Silver 16.09 (+0.16). Dollar easier. Euro higher. Stocks called higher. U.S. 10-year 2.35% (unch).

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The Daily Market Report: Gold Maintains Post-FOMC Gains


USAGOLD/Peter Grant/12-14-17

Gold extended to new highs for the week in overseas trading, but has since been consolidating the solid gains seen after the Fed’s policy decision yesterday. Silver on the other hand, was unable to sustain the rebound above $16.

Today’s generally better than expected U.S. economic data and steady policy from both the BoE and ECB are providing some support for the dollar, which is a bit of a headwind for gold. With the Fed raising rates and the other major central banks still on hold, the divergence will tend to favor the dollar.

That being said, the Fed’s continued concern about low inflation and slow wage growth may temper tightening expectations if those conditions persist into the new year. As noted yesterday, at some point the central bank is going to have to give up on the notion that the situation is “transitory.”

The World Gold Council’s investor report focuses on Germany, but this paragraph in introduction is a nice thumbnail sketch for the gold market at this point:

Looking ahead to 2018, there are good reasons to be optimistic about gold’s performance. US interest rates may be rising but a lot is priced into the curve already and the direction of the dollar remains uncertain. Meanwhile, the long bull market in equities raises serious questions about prospects for stock prices. — Aram Shishmanian, CEO World Gold Council

That fits nicely with the seasonal patter that has emerged in recent years, where gold has bottomed around the time of the December FOMC meeting and rallied into the new year. Yesterday’s initial post-FOMC rally is encouraging, but some upside follow through is needed to further bolster confidence in the upside.

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Here’s Your Reason To Believe Gold Is Heading Higher – WGC Report

KitcoNews/Daniela Cambone/12-14-17

Despite rising interest rates, a strong U.S. dollar and a persistent bull market in equities, gold managed to defeat the odds this year.

The yellow metal, up close to 9% this year, was the shining star of the glum commodities space.

For John Reade, chief market strategist for the World Gold Council (WGC) – there are several reasons why gold will continue to have an upward trajectory in 2018.

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Gold Investor, December 2017


World Gold Council/12-14-17

To say that the global financial crisis had a seismic effect on markets is almost a truism. But the events of 2008 reshaped investor behaviour too, not least in Germany.

As a nation which values long-term wealth preservation, Germany has a long tradition of gold investment. Around the turn of the century however, German investors discovered a new-found fascination for equities and interest in gold waned. Banks, historic distributors of physical assets, closed down or minimised their gold desks and investment demand fell to generational lows.

The financial crisis transformed that mindset, reminding German investors of the properties that had attracted them to gold in the past – its resilience in the face of disaster; its lack of correlation with other assets; its immunity from credit risk; and above all, its reliability as a wealth generation tool.

Since that time, the German gold market has gone from strength to strength, boosted by a rich ecosphere that facilitates gold investment online, in stores, at banks and via ETFs.

In this edition of Gold Investor, we explore Germany’s relationship with gold, showcasing that, when conditions are right, a gold market can experience rapid development, to the benefit of stakeholders across the value chain.

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Gold edges back from one-week high after strong U.S. data

Reuters/Eric Onstad/12-14-17

Gold pulled back from a one-week high on Thursday after the dollar rebounded following strong U.S. retail sales data.

U.S. retail sales increased more than expected in November as the holiday shopping season got off to a brisk start.

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Morning Snapshot: Gold Eases After BoE and ECB Hold Steady on Policy

USAGOLD/Peter Grant/12-14-17

Gold is down slightly in early U.S. trading. The yellow metal is mostly maintaining yesterday’s post-FOMC gains, but the corresponding retreat in the dollar seems to have stalled following this morning’s round of generally favorable economic data.

Initial jobless claims for last week were lower than expected. November retail sales were in line, but ex-auto beat expectations. Import and export prices were hotter than anticipated as well.

While the data seem to support Fed guidance for another 3 or 4 rate hikes in 2018, periods of data inspired optimism have tended to be fleeting. As noted yesterday, there is still cause for concern on the wage and inflation fronts.

Both the BoE and ECB held steady on policy today, and this divergence with the Fed is likely to provide some underpinning for the dollar. That in turn presents a bit of a headwind for gold.

However, seasonal pressures that have been evident in recent years, provide a potentially countervailing tailwind. If the pattern repeats of course.

Silver was able to regain $16 after the Fed announcement yesterday, but those gains have proven unsustainable thus far. Silver is back below $16 and most of the pullback in the gold/silver ratio from yesterday has already been retraced. Silver remains very undervalued, presenting an intriguing value proposition.

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Gold higher at 1257.51 (+3.21) Silver 16.04 (+0.02). Dollar lower. Euro steady. Stocks called higher. U.S. 10-year 2.36% (+2 bps).

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Daily Market Report: Gold Jumps Following Fed Decision


USAGOLD/Peter Grant/12-13-17

Gold jumped more than 1% on Wednseday, after the Fed did exactly what everyone was expecting. Silver surged more than 2%, reclaiming the $16 level for the first time this week.

The Fed raised interest rates by 25 bps and guidance for next year suggests they remain on track for at least three more hikes. However, both Chicago Fed President Charles Evans and Minneapolis Fed President Neel Kashkari dissented.

That dovish dissent may serve to temper market expectations for further tightening of policy in 2018. While Fed claims to be optimistic on growth and employment, expectations for subdued inflation, wage growth and productivity persist: Even with fiscal stimulus from tax cuts being taken into consideration.

While the GDP projections for the coming years were edged up, growth over the next two-years of 2.5% seems to mark the high point of expectations. The outlook drops to 2.0% by 2020 and the long-range forecast remains at 1.8%. Huh, is that really “optimistic”?

At any rate, the dollar retreated after the policy release, providing some buoyancy to precious metals. We’ll see if there’s some upside follow-through into the new year, as has been the pattern in recent years.

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Gold up more than $10 and silver has regained the 16-handle following Fed policy statement.

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Gold holds near 5-month low ahead of Fed meeting outcome

Reuters/Apeksha Nair/12-13-17

Gold steadied near its weakest level in almost five months on Wednesday amid expectations the Federal Reserve would raise interest rates again at the conclusion of its last policy meeting this year.

The Fed has increased rates twice in 2017 and is still expected to push through three more hikes next year.

…”It’s just consolidating here at the moment until the Federal Open Market Committee statement is out. We’re expecting a rate hike,” the trader said, on gold’s behavior in Asian trading.

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Morning Snapshot: Gold Stabilizes Ahead of Fed Decision

USAGOLD/Peter Grant/12-13-17

Gold is up slightly as the market eagerly awaits the Fed policy decision later today. The yellow metal remains generally on defense, having set a 5-month low yesterday at 1235.90. We’ll see if the December FOMC meeting closely corresponds with a market low for a third consecutive year.

The Fed is widely expected to announce a 25 bps rate hike at 2:00ET today. Focus will be on the forward guidance within the statement and dot-plots, as well as what is likely to be Janet Yellen’s final presser as chair.

Headline CPI met expectations at +0.4% in November, pushing the annualized pace of consumer inflation up to 2.2%. However, core inflation rose just 0.1% m/m and the annualized pace slowed to 1.7%.

There doesn’t seem to be cause for much optimism on the wage or inflation front. I mean, you can only cry “transitory” for so long before you need to acknowledge something structural might be occurring. One really only need look at Japan’s experience over the last 30-years to perhaps get an inkling of what’s in store. Certainly tighter monetary policy is not going to help the cause.

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Gold better at 1245.42 (+1.71). Silver 15.76 (+0.02). Dollar steady. Euro higher. Stocks called higher. U.S. 10-year 2.38% (-2 bps).

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Gold Down But Not Out; Analysts Seek Buying Opportunities

KitcoNews/Neils Christensen/12-12-17

Gold’s downtrend is entering its seventh day as prices have broken below another key support level, but analysts say that lower prices could provide a significant buying opportunity.

…Bill Baruch, president of Blue Line Futures, noted that gold seasonally bottomed in the second half of December only to finish higher by the end of January in nine out of the last 12 years.

“We believe the best place to buy would be in front of $1,225,” he said. “Ultimately, we are looking for a bottoming setup to buy gold and stay long into and through January.”

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The Daily Market Report: Gold Weighed As Fed Meets and Dollar Rises


USAGOLD/Peter Grant/12-12-17

Gold’s annual slide ahead of the December FOMC decision continues, with a new 5-month low established at 1235.90. The dollar index has edged to a new 4-week high in anticipation of a rate hike tomorrow and perhaps more hawkish guidance for 2018.

However, there is another camp that believes weak wage growth and inflation continue to warrant a note of caution on the part of the Fed. These were the precise reasons the central bank opted to pause the tightening cycle back in September, and neither condition has materially improved in the intervening months.

Before the policy statement is released, the market will get a look at November CPI. While an uptick in the annualized pace of headline consumer inflation is anticipated, core inflation is expected to remain stagnant.

Congressional Republicans are reportedly closing in on a reconciled tax bill. There’s very little margin for error here, as the Republicans can’t really afford to lose more than one vote in the Senate.

One thing seems certain, the legislation will add $1.5 trillion to the debt over the next decade, the maximum allowed. It will likely be quite a bit more, especially if the long-overdue recession strikes at some point during the next 10-years.

Then Congress only has until December 22 to pass a budget and raise or suspend the debt ceiling. Or of course, they could always kick the can again.

Which brings us full-circle back to the Fed. Rising debt and tighter policy — via higher rates and so-called “normilization” of the Fed’s balance sheet — creates a significant headwind for growth. The Fed could end up triggering that overdue recession.

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