Too Little Too Late? Will the Fed's Taper Be Able to Stop the US Dollar Going Off a Cliff?

May 7, 2014

Janet Yellen has a BIG problem on her hands.

The Fed has been tapering its QE programs to the tune of $10 billion per month or so. The problem with this is that the Fed is once again behind the curve and the markets are already smelling inflation.

Indeed, the US Dollar just took out key support yesterday.

This is a HUGE problem for the Yellen Fed. They are already tapering QE but the markets continue to display inflationary tendencies. What is the Fed to do? Raise rates? It’s already said that won’t happen for another year. And tapering QE more aggressively could tank stocks.

Meanwhile, food prices are roaring higher. Wholesale beef prices are up 21% from this period last year. Pork prices are up 56%. Agricultural commodities in general have moved sharply since the beginning of the year.

The problem with inflation is that it is a lot easier to create than contain. The Fed continues with its dubious claims that inflation is too low, but the markets and prices are saying otherwise.

Buckle up, much higher prices are coming. The Fed is behind the curve again, just as it was in 2007. We all know what happened next.


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Phoenix Capital Research

Graham Summers is Chief Market Strategist for Phoenix Capital Research, an independent investment research firm based in the Washington DC-metro area with clients in 56 countries around the world.

Graham’s clients include over 20,000 retail investors as well as strategists at some of the largest financial institutions in the world (Morgan Stanley, Merrill Lynch, Royal Bank of Scotland, UBS, and Raymond James to name a few). His views on business and investing has been featured in RollingStone magazine, The New York Post, CNN Money, Crain’s New York Business, the National Review, Thomson Reuters, the Glenn Beck Show and more.

The symbol for silver ‘AG’ comes from the Latin word ‘agentum’ meaning silver.