According to the latest CNBC Fed Survey, the Fed will stay on hold for the rest of 2021 despite concerns of an overheating economy. Surveyors forecast the Fed won’t reduce its $120 billion of asset purchases until January. The survey also found that the first rate hike won’t come until December 2022. While eyes are on the stock market and the impact Biden’s latest tax proposal will have on the economy, experts say many precious metals are bullish, adding that investors could soon see a move higher in gold.

 

CNBC/Steve Liesman
The Fed will stay put in 2021 despite growing concerns about overheating economy, CNBC survey says

The Federal Reserve will remain on hold for the rest of this year despite an increasing belief on Wall Street that policymakers should throttle back the stimulus they’re providing to the U.S. economy, according to the latest CNBC Fed Survey.

Respondents to the survey forecast the Fed won’t reduce its $120 billion of asset purchases until January, three months later than predicted in CNBC’s March survey. And the first rate hike won’t come until December 2022, survey respondents said.

Yet 68% of the 34 respondents say the Fed does not need to make those asset purchases to help the market function and 65% say the Fed doesn’t need to do them to help the economy. More than half — 56% — say the Fed should respond to the massive fiscal stimulus from the Biden administration by cutting back asset purchases and raising rates sooner.

“While it is appropriate for the Fed to not comment on fiscal policy, it is entirely appropriate for monetary policy to take significant fiscal policy shifts into account in calibrating the stance of monetary policy, but the Fed is not doing this,” wrote John Ryding, chief economic advisor at Brean Capital. “Monetary policy looks set to be too easy for too long.”

“Pressure on the Fed to start tapering QE, which is doing nothing for economic growth to begin with, will only intensify in the coming months” said Peter Boockvar, chief investment officer at Bleakley Advisory Group.

Read more about the survey, here.

 

Kitco News/Anna Golubova
‘We are sitting on economic cliff’: Gold price will be ‘well north of $2,000 this year’ – ex-JP Morgan MD

Investors could see a big move higher in gold soon, according to ex-JP Morgan managing director and now CEO of Trovio, Jon Deane, who sees prices trading well north of $2,000 an ounce this year.

Inflation is already here, and the world is sitting on an economic cliff, which makes assets like gold, silver, and bitcoin very popular with investors, Deane told Kitco News.

“We are already seeing inflation. If you look around the world, you see real estate prices, building supplies, and services skyrocket,” he said. “What we created since the early 1990s is an entire financial infrastructure that is relying on debt, and we have accelerated that dramatically in our response to managing the COVID-19 crisis. In that regard, we will continue to increase the money supply globally, and we will continue to have a quite aggressive fiscal policy. We are sitting on an economic cliff.”

After shedding weak long positions in gold, the precious metal’s technical picture is looking much better.

“We’ll see a real big move in gold. We’ve taken a lot of the length out. We are in a real position to move higher. We’ll go well north of $2,000 this year. Realistically, $2,200 is probable. It may have some headwinds as we go through $2,000 again. Gold is in a much better position than where it was a few months ago,” Deane said.

Read about the outlook for silver, here.

 

Yahoo! Finance/Myles Udland
The corporate tax angle no one is talking about: Morning Brief

Changes in the U.S. tax code are a top of mind consideration for investors.

Last week’s headlines were primarily focused on potential changes in the capital gains tax; an increase in the corporate tax rate has also been proposed. Though as Yahoo Finance’s Rick Newman notes, any eventual changes in tax rates are likely to be smaller than initial indications.

These opening bids from the White House have, however, set off plenty of reaction among Wall Street strategists and analysts trying to answer a common question from their clients: What does this mean for markets?

Sam Ro covered some of this work in The Morning Brief on Monday. According to Brian Belski at BMO, history is clear: stocks have gone up in years after an increase in the corporate tax rate. An increase in the capital gains take has also been followed by higher stock prices on average, according to LPL.

Whether stocks go up after any tax change, however, isn’t the main concern when it comes to how tax changes impact investment decisions. The performance of the stock market is an absolute outcome: either stocks go up or down. But for most investors, the relative performance of an asset is what matters most.

Continue reading, here.

 

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