With the Federal Reserve Board Chairman Jerome Powell hiking the Federal Funds Rate 75 basis-points June 15, Morgan Stanley’s chief strategist Mike Wilson thinks the Fed’s action could lead to recession in 2023. Powell admitted that he has no control over geopolitical events like the Ukraine War. Yet Powell signaled to 79-year-old President Joe Biden that there would be consequences to the U.S. economy for funding the Ukraine government and war with the Russian Federation. Ignoring the warning, Biden plowed right into a costly war, supplying unlimited arms and over $40 billion to fund the war effort. Now panicking over 8.6% inflation in May, Powell has screeched the brakes, raising the Federal Funds rate 75 basis points almost guaranteeing recession in 2023. Biden tosses all common sense to the wind, spending U.S. tax dollars like a drunken sailor.
Real consequences to ordinary citizens have surfaced like a nuclear submarine, with gas prices doubling in the last few months. Ordinary Americans are so strapped for cash, retail sales dropped by 0.3% in May, increasing the chances of recession in 2022, certainly 2023. “It doesn’t really change our intermediate-term view, unfortunately. I don’t think this is going to solve the inflation problems overnight,” Wilson told CNBC’s “Closing Bell,” confirming that Powell’s move of 75 basis points isn’t likely to put a dent in inflation. When Biden decided he’d take on the Russian Federation in a proxy war he not only tanked Ukraine’s economy, he sent the U.S. economy into a tailspin. Biden thought he punished Russia for invading Ukraine Feb. 24, not realizing that the U.S. and world economy could not boycott Russian oil without creating global shortages and skyrocketing prices.
Since taking office, Biden got on his high horse, blasting Russia and China for human rights abuses. Things didn’t start well when Biden called Putin as “soulless killer” March 18, 2021 on the eve of a get-to-know-you summit in Anchorage, Alaska where 59-year-old Secretary of State Antony Blinken and 45-year-old National Security Adviser Jake Sullivan accused Beijing of genocide against Muslim Uyghurs in Xinjiang Province in Western China. Things went from bad to worse when Biden flopped June 16, 2021at a summit with Russian President Vladimir Putin in Geneva, Switzerland. In a matter of months Putin built up his forces inside Russian near the Ukrainian border over the next six months. More hostile rhetoric from the White House prompted Putin to invade Ukraine Feb. 24, sending world energy markets into chaos. Biden had no qualms boycotting Russian oil, skyrocketing U.S. gas prices.
Biden pulled the same stunt with Saudi Crown Prince Mohammed bin Salman, the de facto leader of Saudi Arabia. Biden ssaid he’d never meet with Bin Salman over his alleged role in the Oct. 2, 2018 murder of the Washington Post columnist Jamal Khashoggi in the Saudi Embassy in Istanbul. Why Khashoggi went to a trap in the Saudi embassy is anyone’s guess. But Biden said he’d never meet with Bin Salman because of his human rights abuses. Once the Russian oil embargo played havoc in U.S. energy markets, Biden begged Bin Salman for a meeting. White House officials announced last week Biden’s plans to meet face-to-face with Bin Salman to beg for more Saudi oil. Now that Joe’s approval ratings dipped below 40%, he’s desperate for any quick fix to deal with the energy crisis. Biden has no plans for more U.S.-based fossil fuel production, something that flourished under Trump.
Biden has no plan to end the disastrous Ukraine War anytime soon. Giving Ukraine’s 44-year-old President Volodymyr Zelensky more cash and lethal weapons, Biden plans to keep the war going for the foreseeable future. If Biden committed Ukraine to the peace table, there’s hope of turning around the slumping U.S. economy. Yet every time Zelensky asks for more lethal weapons, Biden obliges him, despite the fact that keeping the war going is the biggest drag on the U.S. and world economy. “It also raises the risk of recession, because you’re bringing rate hikes forward even faster. The Fed is hiking into a slowdown, and they don’t really have a lot of options,” Morgan Stanley’s Wilson said. No one in Biden’s Cabinet has dared to confront him of what’s causing the current economic slowdown. If Biden doesn’t end the Ukraine War, there’s little hope the economy can recover.
Biden’s foreign policy has tanked the U.S. economy, funding a costly war and paying Ukraine’s government salaries. Unless Biden changes course in Ukraine, there’s little hope to open Russian energy markets to the European Union and elsewhere, including the U.S. Biden has no plan for energy independence domestically, instead has unrealistic plans to develop more alternative energy, not enough to power American industry. Fed Chairman Jerome Powell is in a classic over-correction mode, thinking he can just hike rates to any level without serious repercussions on the U.S. economy. “The one thing we’ve wrong this year is rates were up even faster than we expected,” Wilson said, concerned about the growing prospects of recession. Unless Biden is prepared to pivot off his suicide mission for Ukraine and the U.S. economy, there’s little the Fed can do to avoid recession.
