Fed Chair in the Hot Seat
“A Major Loser”
Let’s take a few moments to unpack the narrative: You’ve no doubt heard about why the stock market fell out of bed (again) yesterday.
“Stocks got slammed again Tuesday,” says Yahoo Finance, “after President Trump issued more insults at Fed Chair Jerome Powell.”
Trump called Powell “a major loser” and demanded the Fed cut short-term interest rates “NOW.”
“Investors are beginning to worry about the independence of the U.S. central bank,” harrumphs the Financial Times, “as the president increases the volume of his attacks, threatening decades of monetary policy as well as the dollar’s status as the world’s reserve currency.”
Reality check: The Fed’s vaunted “independence” has been a joke for many decades.
When inflation was roaring higher in 2021–22, Joe Biden made clear that he expected Powell’s Fed to get it back under control: “A critical job in making sure that the elevated prices don't become entrenched rests with the Federal Reserve."
Back in the 1960s, President Lyndon Johnson shoved Fed Chair William McChesney Martin into a wall to reinforce his wishes for lower interest rates.
A few years later, Richard Nixon leaned on Fed Chair Arthur Burns to open the monetary spigots to ensure Nixon’s re-election in 1972 — an act that set the stage for near-runaway inflation during the Jimmy Carter years.
As legend has it, a German reporter asked him why he pursued such a reckless policy. Burns replied that a Fed chairman must do what the president wants or else “the central bank would lose its independence.”
So… contrary to what the mainstream says, Mr. Market was not freaked out yesterday at the prospect of the Fed losing its “independence.” Rather, Mr. Market was freaked out that his illusion of Fed “independence” was laid bare for all the world to see.
“Look, investors are terrified,” says Paradigm’s hedge fund and private equity veteran James Altucher. “The entire market is whipsawing like a penny stock. And people are frozen in fear.
“But sitting on the sidelines is the absolute worst thing you could do right now — because a generational opportunity is sitting before us.”
In the coming days, James anticipates an event he says “is 100% certain to happen.
“I haven’t seen anything like this… in 17 years.”
To help you seize the moment, James is hosting an exclusive event this Thursday at 11:00 a.m. EDT. We ask that you sign up in advance — but signup is as simple as clicking on this link. We’ll email you all the follow-up information you’ll need to be ready Thursday.
The Great Dollar Shortage Is Back
There’s still another wrinkle to the abnormal sell-off in the bond market this month.
As we’ve chronicled the last couple of weeks, scared money fleeing out of stocks typically floods into U.S. Treasuries because of their presumed safe-haven status. That’s how it worked during the 2020 COVID panic and the 2008 financial crisis.
But that’s not what happened this time. Stocks and bonds sold off hard together.
Here too, mainstream narratives are all about Trump (and the tariffs), stripping out any historical context.
We can’t say it often enough: The Biden administration’s unprecedented act of freezing Russia’s U.S. Treasury holdings did at least as much to undermine global confidence in Treasuries as Trump’s tariff regime — just not as suddenly.
Beyond that, there’s a general recognition now that Uncle Sam will never get his fiscal act together — not after a quarter-century of “forever wars,” bank bailouts and the mad COVID spending.
But Jim Rickards says there’s even more to the story.
Jim and his team of experts are gathering today in Jekyll Island, Georgia — where the concept of the Federal Reserve was first hatched among secretive elites in 1910. As you might expect, the bond market is one of the hot topics.
“It is true that China (and others) are selling U.S. Treasuries, but that is not a sign of dumping or getting out of U.S. dollars. Quite the opposite,” Jim wrote his Strategic Intelligence readers this week.
“The real explanation is that there is a global shortage of dollars and dollar-denominated collateral such as Treasury bills. China is selling Treasuries, but it’s out of desperation to get dollars to prop up its currency and its banking system. China wishes it had more dollars and more Treasuries, but it can’t afford them due to the dollar shortage.”
The dollar shortage Jim describes isn’t new; it’s been ongoing in one form or another since 2016. We last had occasion to visit the issue in depth in the fall of 2023.
“This points to the real problem,” Jim says. “We’re on the brink of a global liquidity crisis possibly worse than 2020 and 2008. It has to do with fear in the banking system and some mismanagement by the U.S. Treasury. It’s not about tariffs; it’s about credit.
“It’s not too late to reduce equity exposure and increase allocations to cash and gold. That move will see you through.”
For sure, Jim and crew will dive deeper into the topic tomorrow at 2:00 p.m. EDT during a briefing just for you, titled The Final Secret of Jekyll Island.
Everything you need to know about how we got here in 2025, and what to expect the rest of the year — the Rickards team will cover it all. This is a free event and we won’t try to sell you a premium trading service. We just want you to have a better handle on all the cross-currents that are making this year so, umm, interesting.
Check out tomorrow’s agenda at this link. We’ll email you a link to the livestream shortly before it gets underway.
Rebound Day
Whether it’s just an oversold bounce or something more meaningful, the major U.S. stock indexes are rallying after yesterday’s sell-off.
Stock futures started taking off last night amid rumors that the Trump administration was about to reach a trade deal with Vietnam — which would be significant because the White House views much of Vietnam’s export trade as originating in China.
At this point, any deal with anyone would instill some measure of confidence that the administration has a plan and it’s executing the plan.
But even in the absence of a done deal and a definitive announcement… the S&P 500 has recovered more than half of yesterday’s losses. As we write, the index is up 1.8% to 5,253. That’s down about 14.5% from the S&P’s record close on Feb. 19.
Bonds sold off as well yesterday, but those too are staging a rebound. The yield on a 10-year Treasury note is 4.39%.
Gold futures popped over $3,500 overnight and have sunk steadily since. At last check the bid in the spot market is $3,431, still a tad higher than at this time 24 hours ago. Silver is a dime away from $33.
Elsewhere in the commodity complex, crude is up nearly a buck to $64 on the nose.
At last, Bitcoin seems to be enjoying some safe-haven buying alongside gold — surpassing $90,000 for the first time since early March.
Comic Relief
We present the following with no further comment…
Mailbag: The TSA
After our update in yesterday’s edition on the Real ID requirements coming into effect for air travelers last month, a reader weighs in…
“Reading Bullet No. 4 made me reflect on the millions of shoeless, beltless travelers (like the faceless school children falling into the Pink Floyd meat grinder in the movie The Wall) stumbling their way through the TSA obscene search lines.
“The overriding question; How many hijackings have there been since 911, as a percentage of the number of flights? Why should I think one more star on my driver's license is going to have any effect on anything except the extra income to driver's license bureaus? Oh, and more loss of privacy since my face is now in a national database?
“Rep. Massie may well be right, but who (in the deep state) really cares what he says?”
Dave responds: And where the hell are the DOGE boys when you need them?
Best regards,
Dave Gonigam
Managing editor, Paradigm Pressroom's 5 Bullets
P.S. Apologies for the rather abbreviated nature of today’s edition. Your editor is battling stomach flu so severe it prevented me from joining the Rickards crew at Jekyll Island. Off to get some more rest…
