The Federal Reserve during the FOMC and in its SEP has hinted greatly towards deep rate cuts in 2024 because they see the CPI going down and no longer feel the need to tighten further, and are under the assumption that great progress has been made.
I for one do not agree with this perspective and think rates need to go much higher before inflation can truly be subsided.
Since the Fed is under what I view as a false assumption, I think we will now see Inflation and the CPI come back up even higher and faster than the first inflationary run up and that we will see this greatly reflected in Food, Energy, and Shipping prices. Along with this, I think it will affect the pricing of Rare Earth Elements which should end up being a positive for the Assets on the balance sheet of producers such as MP Materials, VALE, and US Steel: X, along with the REMX ETF; as demand for ships and other means of shipment/transport increases.
The increase in demand for these types of shipments should also drive demand for the materials the shipping vehicles are made of, which should drive the prices higher for both.
I do not think Gold and Silver will join this inflationary rally due to the collapse of the Japanese Carry Trade, and I do not believe the Dollar will lose much value during this rally in inflationary materials except against the Yen. This dynamic should also limit the rally potential in the big stock indexes, I only really expect certain names to benefit from the kind of inflation we are dealing with.
So in short, I think the Bulk Dry Index continues to rise, Shipping Cost Rise, Ships themselves Rise, Oil Rises, and Rare Earth Materials Rise and when that happens, I suspect the Fed will pivot hard back in the other direction and start raising rates again.
Interesting analysis. I think we will see inflation fall all the way to zero first - the FED will grapple with deflation before more inflation, because I suspect this has been their intention all along. They followed the BoJ's playbook for quantitative easing, just "better," getting a whole decade plus out of it. Now I think they will follow the post-1997 BoJ example for deflation, just "better"... How long is the trillion dollar question.
RizeSenpai
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@it_will_fluctuate, Yea I personally think we will see inflation rise a lot due to the fed's hints and lack of action but I also think the fed will be fast to react and raise rates as soon as the market speculates to hard and CPI rises again. From there i think we will see rapid deflation (not just disinflation.). I also don't think this will be good for gold as seen here: