Fed Enters Tightening Cycle

Source: Michael Ballanger 09/21/2026

Michael Ballanger of GGM Advisory Inc. looks at the current state of the market after the Fed’s recent hike.

Back in the “good ol’ days“, the only tug-o-wars that commanded any kind of media scrutiny were when the current POTUS would latch on to his Truth Social website and launch verbal howitzers at then-Fed-Chairman Jerome Powell. Some of the more creative descriptives were Trump calling Powell a “numbskull,” “moron” (including “complete moron“), “fool,” “jerk,” “a real dummy,” and “truly one of the dumbest and most destructive people in government.” The illustrious chief executive further advanced the literary legacy of the Oval Office by labeling him “Jerome ‘Too Late’ Powell” with the nickname “Too Late,” mocking Powell’s timing on interest rate adjustments while publicly blasting him as being “TOO LATE, TOO ANGRY, TOO STUPID, & TOO POLITICAL.”

Targeting his competence and intelligence, Trump labeled Powell “grossly incompetent“ and “crooked,” claiming in speeches that “the guy is not a smart person” and that talking to him is “like talking to a nothing.” He further characterized Powell’s leadership as an “American disgrace“ and a “total loser“ or “major loser“, alleging that the central bank’s policies cost the country trillions of dollars. Finally, in what could be classified as a series of “low blows“, during a speech at the U.S.-Saudi Business Forum, Trump went as far as to say that Powell has “some real mental problems“ and added, “I’d love to fire his ass.” He also once compared Powell’s performance to “a golfer who can’t putt, has no touch.”

All this coming from the highest office in the Land of the Free and the Home of the Brave.

Incredible.

It actually begs the question that has been circling around the Beltway all week: “Why has Trump been so ‘soft’ on Warsh despite the FOMC voting unanimously 12-0 to hike rates?”

Why, you simply blame a “hostile” Fed Board, as Trump has publicly cast the rest of the rate-setting committee as the true “adversaries”. Defending Warsh as a “good man” who is simply stuck managing a “very tough board” filled with “politicians” put there by other people, the last thing the president needs is another scandalous squabble with a mere six weeks left until the midterms.

The graph shown on the last page is interesting in that it shows how the current president is polling as compared to where he was in 2017 and as compared to former president Joe Biden in 2021. Trump’s current approval rating is worse in 2026 than either his 2017 or Biden’s in 2021.

In the Senate, Republicans hold a 53–45 majority with the remaining 2 seats held by independents who caucus with the Democrats, bringing the effective opposition block to 47 votes. In the House of Representatives, Republicans hold a razor-thin majority with a roughly 218-to-212 seat advantage over Democrats, alongside a few vacant seats. With approval ratings so very low for the sitting president, one must speculate whether or not those tentative Republican majorities will hold. If one listens to the Wall Street perma-bulls, the upcoming midterms are meaningless to earnings and therefore meaningless to the primary driver for stock prices. However, in the period of 1973-1975, when the Watergate hearings were being carried out, the Democrats controlled both the House and the Senate by wide margins.

It is my opinion that the level of vitriol is so high and distinctly anti-Trump that it will be very difficult for Trump to remain in office if the Democrats take control of both of the legislative bodies of the American government. You must recall that President Nixon won the election in 1972 by a landslide but was still facing impeachment proceedings by the time he resigned the presidency on August 9, 1974.

Between accusations of massive grift and corruption during his second term, a good bellwether for public opinion is a recent interview with actor Jeff Daniels, who delivered a scathing assessment of Donald Trump’s presidency, character, and impact on American culture, offering some of his most blunt commentary during a prominent appearance on Nicolle Wallace’s The Best People podcast.

Under the Trump presidency, Daniels said, “We’ve lost decency, we’ve lost civility, we’ve lost respect for the rule of law.” He further stated how the political climate has reshaped public behavior, arguing that the administration has “normalized verbal abuse on the internet” and “normalized bullying.” He expressed frustration that a style of leadership he views as fundamentally un-American has been validated.

Mind you, Hollywood has always leaned heavily in favor of the Democratic party, but more so in recent years, so perhaps the ramblings of the “Dumb and dumber” co-star should be ignored, but I stand by my conviction that the 2026 mid-term elections will have an impact.

In other words, watch the polling numbers carefully as we approach November 3.

Oil

Despite a spike in the 10-year yield through the 5% level and with the 30-year yield well through my 5% “Line-in-the-Sand” at 5.30%, it is amazing to me that stock prices are still within 2.44% of record all-time highs, basis the S&P 500.

The pundits were saying last year with long yields at 4.40% that a move through 5% would surely derail the bull market in stocks.

Well, the 5% level was overcome in May of 2025 and again in May of 2026 in response to the spike in oil prices, thanks to the effects of the conflict in the Middle East. After oil was jawboned down with promises of a “Great Peace Deal”, the resumption of hostilities created a heightened sense of alarm regarding the amount of permanent impairment of the production facilities across the Middle East taking oil prices back through $100/bbl. But yields even higher, with the 30-year peaking at 5.401% a few days ago.

Last week, I wrote extensively about the “yips” that yields were having, but if you look at the chart of the 10-year juxtaposed against the chart of West Texas Intermediate Crude, you see that they are perfectly correlated to one another, with it all beginning with the conflict in late February in the Middle East.

Home heating oil that keeps millions of households from freezing every winter in the U.S. is up 67.12% since the lows in June, while diesel fuel is up 47.06% since those same lows.

According to data from the U.S. Energy Information Administration (EIA), diesel fuel is used across five primary facets (or sectors) of the U.S. economy and industry. Because of its high energy density and efficiency, it functions as the fundamental “workhorse” powering American commerce.

With both home heating oil and diesel fuel screaming higher, domestic inflation is egregiously understated, be it to garner votes come November or to keep foreign holders of U.S. bonds placated and “at bay“.

So, if there were any doubts about the need to cool off the U.S. economy, how pray tell can a slowing economy and expensive cost of money force crude oil, heating oil, and diesel fuel lower? David Rosenberg writes that “history offers absolutely zero comfort for a central bank tightening into an energy-price shock“. Outside of 2022—when households were flush with $2 trillion in pandemic-era savings—the Federal Reserve has never avoided a recession in the postwar period under these exact conditions. “

So, when I read that this guru is bullish and that guru is bullish and they all cite “strong corporate earnings growth” as a driver of valuation, that only bears out if the U.S. can avoid recession. If Rosenberg is right (and the data confirms this), then the U.S. will be well into a recession brought on not only by monetary tightening but also by rising input costs related to energy.

However, central bankers and politicians the world over know that half the voters that count own stocks, so they do all that they can to keep stocks levitating. It has driven me batty since the 2007-2008 Great Financial Crisis and shows little if any signs of abating. I own a few hedges, but I am basically long commodities and commodity explorers, developers, and producers because there is nothing either Kevin Warsh or Scott Bessent can do to increase the supply of copper, gold, oil, or corn.

Precious Metals

The precious metals finish the week with a strong post-FOMC rally, with silver drastically outperforming gold, locking in a 3.9% to 4.5% weekly surge. Gold recovered roughly 0.2% to 0.6% on a week-to-week basis but staged a massive intra-week rebound of up to $182 an ounce from its lowest point. Copper has been volatile but managed to eke out a $.1455/lb. increase on a week-to-week basis.

The ETF I use for trading is the SPDR Gold Shares ETF (GLD:NYSE) and as you can see from the chart posted below, that huge red candle from the post-Jackson hole speech by Kevin Warsh put a real damper on the rally that began in mid-July that had dozens of armchair technicians, blogsters, podcasters, and precious metals cheerleaders all proclaiming the end of the bear market and that “SILVER TO $500 by summer” was just around the corner.

My subscribers were told to refrain from chasing any rallies until there was a successful re-test of that zone between the 100-dma and 200-dma that formed huge overhead resistance during the advance. After finally breaking out above the 200-dma around $415, gold rocketed to $430 like a hot knife through hashish, but without a similar breakout in silver, I warned subscribers to wait.

The net result is a market for GLD that is stuck in the bottom quintile of the “convergence zone” and a market for SLV:US that cannot even make it back to its “convergence zone” between $60.33 and $65.80. It seems like a lifetime ago that SLV:US traded at $109.83 in one of the most spectacular blow-off tops in market history.

I am not particularly bearish on either gold or silver; it is just that after the kinds of moves they had in 2024 and 2025, it might take more than a few months of consolidation to repair the technical damage done in Q1/2026. I still own lots of gold miners with particular emphasis on a relatively new position, which I began building in late 2024, called Grafton Resources Inc. (GFT:CSE; GFTFF:OTCQB), that has been busy assembling gold projects in Chile.

The company just closed a CA$2,217,500 placement of units, giving them a CA$5m-plus working capital position on issued capital of only 36.7m shares plus four barnburner exploration targets in a highly-prospective area of Chile.

I should be learning more about these projects as the Chilean winter comes to a close, opening up the South American drilling season, which should be very exciting.

I would like to see the gold and silver miners led by the GDX and the GDXJ begin to act better before going “ALL-IN” on the juniors because when the big boys lead the charge, there is lots of ancillary buying power that trickles down to the juniors.

If you remember back to 2023, it was the gold miners that led the charge, followed soon thereafter by the physical metals, but leading the pack during the really BIG move was silver and the silver miners. Thus far in 2026, it has been the lackluster performance of the silver miners and physical silver that has tempered my bullish enthusiasm, and thus far, that has been the correct analysis.

By contrast, copper is an entirely different story. Of all the metals I cover, copper was joined by nickel, tin, and aluminum in registering new highs after the late-January blow-off top was completed. In fact, zinc registered multi-decade highs late last month with the only higher print occurring in November 2006. Among all the base metals, copper is widely considered by analysts and macroeconomists to have the absolute best fundamental backdrop.

Often referred to as “Dr. Copper” for its ability to gauge global economic health, its combination of near-term supply chokepoints and generational demand drivers sets it apart from the rest of the base metals complex. The structural supply-demand mismatch makes copper the standout choice.

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Important Disclosures:

1. As of the date of this article, officers, contractors, shareholders, and/or employees of Streetwise Reports LLC (including members of their household) own securities of Grafton Resources.
2. Michael Ballanger: I, or members of my immediate household or family, own securities of: Grafton Resources and GLD. My company has a financial relationship with: None. My company has purchased stocks mentioned in this article for my management clients: None. I determined which companies would be included in this article based on my research and understanding of the sector.
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Michael Ballanger Disclosures

This letter makes no guarantee or warranty on the accuracy or completeness of the data provided. Nothing contained herein is intended or shall be deemed to be investment advice, implied or otherwise. This letter represents my views and replicates trades that I am making but nothing more than that. Always consult your registered advisor to assist you with your investments. I accept no liability for any loss arising from the use of the data contained on this letter. Options and junior mining stocks contain a high level of risk that may result in the loss of part or all invested capital and therefore are suitable for experienced and professional investors and traders only. One should be familiar with the risks involved in junior mining and options trading and we recommend consulting a financial adviser if you feel you do not understand the risks involved.

( Companies Mentioned: GFT:CSE;GFTFF:OTCQB, )

Source: https://www.streetwisereports.com/article/2026/09/21/fed-enters-tightening-cycle.html