Looking for a 5x4 By Memorial Day

Powell gave remarks at Stanford University earlier today where he is still sticking to his guns that we are merely seeing a "bumpy" path down to 2% target inflation. In other words, the recent data are not swaying him off his rate cut plan for later this year, just yet. 

Powell and his cohorts at The Fed have been awfully stubborn on this topic, perhaps indicative of the political pressures they are facing beyond even election year and instead pertaining to the national debt. 

Either way, inflation remains a menace.

Silver, gold, copper, and oil are all ripping higher today, with silver and the precious miners in particular acting with more vigor than at anytime in recent memory. You may note that even some of the savvier, seasoned macro veterans are frozen solid by this move in commodities and inclined to shrug it off. 

However, my read is that we are in the early stages of The Fed losing control of asset classes, with the potential for an inflationary recession where commodities and rates spike while most equities unwind lower. 

By Memorial Day, I am looking for rates on the 10-Year Note to hit 5%, and gasoline prices nationwide to average $4 a gallon. Under those circumstances, The Fed will have no choice but to tilt back to the inflation side of the mandate and desperately try to talk down prices via rate hikes. At a minimum, cutting rates into that "5x4" scenario ensures the worst monetary policy blunder in modern American history.