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President Biden’s son left federal court Wednesday after his pre-arranged plea deal with the Justice Department (DOJ) fell apart after surprising revelations that Hunter Biden is still under investigation for possible Foreign Agents Registration Act (FARA) crimes. 

Hunter Biden was expected to plead guilty to two misdemeanor tax counts of willful failure to pay federal income tax as part of a plea deal to avoid jail time on a felony gun charge.

But Judge Maryellen Noreika did not accept the plea agreement, questioning its constitutionality and the broad immunity Hunter Biden would have received, leading Hunter Biden to plead ‘not guilty’ instead.

Criminal prosection experts say that the younger Biden went from ‘a sweetheart deal’ to a ‘real poison pill’ that could ‘expose him across the board.’

‘The judge had an obligation to make sure that the defendant and the government have a very clear idea of what is implicated guaranteed,’ Jonathan Turley, criminal law professor at George Washington University, told Fox News, adding that ‘they didn’t have that.’

Turley said the plea deal dissolving in such a manor is ‘extremely rare’ akin to ‘a wedding where both the groom and bride object.’

Hunter Biden, 53, has been under federal investigation since 2018. That investigation into his ‘tax affairs’ began amid the discovery of suspicious activity reports that related to money from ‘China and other foreign nations.’ IRS whistleblowers said the investigation began as an offshoot from an existing probe into a foreign pornography platform.

Hunter was expected to plead guilty to two misdemeanor counts of willful failure to pay more than $1 million in federal income tax in exchange for immunity from other crimes.

He was also expected to enter into a pretrial diversion agreement for a separate felony charge of possession of a firearm – an element of which Noreika expressed questions of constitutionality.

Turley said the ‘sweetheart deal’ was an effort to ‘cap off’ the years-long federal probe into Hunter Biden’s taxes and foreign business dealings. ‘But now, it’s the worst possible situation for Hunter Biden,’ Turley said.

Turley said Biden ‘doesn’t have any protection at all’ and that the Department of Justice is in a position where they can bring to bear any or all of the remaining counts, including FARA.

‘And they usually do,’ Turley said. When a defendant ‘goes south’ on a plea deal, the DOJ usually ‘puts everything on the table for a potential trial.’

Jim Trusty, criminal prosecutor and former lawyer for former President Donald Trump, said the plea deal breakdown was unusual.

‘Up until today, Delaware was looking like the place where investigations go to die,’ Trusty told Fox News Digital.

But DOJ attorneys reiterated to the judge that there is an ‘ongoing investigation’ surrounding Hunter Biden.

At one point the judge asked DOJ prosecutor Leo Wise, ‘Is there an ongoing investigation here?’

Wise answered that ‘there is’ but said he couldn’t tell the judge what the investigation was into. When she asked if the government could potentially bring a FARA charge, Wise answered, ‘Yes.’

Scharf said that a likely next-step scenario is that a new plea deal will be put in place that will be limited to crimes within the jurisdiction of the District of Delaware, namely the tax crimes, gun and drug charges.

‘I think Hunter is just going to have to eat that and accept that he will continue to be under investigation for FARA,’ he said. 

‘Hunter is not out of the water. He is in a lot of trouble. And the situation is going to continue to develop. Today was, I think, in Hunter’s mind, supposed to be the end. And instead, he found out he’s really pretty close to the beginning,’ Scharf added.

Fox News Digital’s Brooke Singman contributed to this report.

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The White House revealed Wednesday where it now stands on the possible existence of alien life, telling reporters they ‘don’t know’ whether the numerous sightings of unidentified aerial phenomena (UAP) are proof whether extraterrestrials are real.

‘We don’t know. We don’t have the answers about what these phenomena are,’ National Security Council spokesman John Kirby told a reporter at the daily White House press briefing who asked if the U.S. government believed there ‘may be life outside of our planet.’

Kirby said he didn’t have a position on it ‘one way or the other’ that he could immediately speak to, but did say the government believed ‘there are unexplained aerial phenomena that have been sighted and reported by pilots, Navy and Air Force, that these phenomena have in some cases had an impact on our training ranges, on our pilots’ ability to fly, train, operate and stay ready.’ 

‘That alone makes it a national security issue worth looking at,’ he added. ‘Unidentified aerial phenomena doesn’t exactly roll off the tongue, but it’s an honest assessment of what we think about this problem set. And so we’ll see where it goes.’

Earlier in the briefing, Kirby told another reporter that he had ‘no information’ to provide ‘one way or the other’ on the existence of a ‘UAP crash retrieval and reverse engineering program,’ but admitted the White House takes the issue of UAPs seriously.

‘There’s a whole office at the Pentagon that is stood up to analyze the data, collect reports, collate those reports and forward them up appropriately. And that’s, I think, testament to the fact that we know that in some cases these phenomena have impacted military training, have an impact on military readiness,’ he said.

The reporter pressed Kirby, asking whether President Biden felt claims of the existence of such a program warranted further investigation, and if the White House saw them as credible.

‘If the president didn’t believe that the sightings by pilots were serious enough to be considered, he wouldn’t have wanted the Pentagon to stand up an office to look at this, to analyze the data, to collect reports and provide a system by which we can collate the information and better figure out what we’ve got here,’ Kirby responded. 

‘But that work is ongoing. So if your question is do we think we need to be transparent with the American people, of course, we need to be as transparent as we can be. But the truth is… we don’t have hard and fast answers on these things. We are trying to get smarter on it,’ he added.

Kirby’s statements come on the same day that the House Oversight Committee held a hearing concerning the sightings of UAPs and unidentified flying objects (UFOs), which included testimony from whistleblower David Grusch, who testified under oath his life was threatened and that he was instructed to keep quiet about a secret government-run crashed UFO retrieval program. 

Another witness told members of the committee he believed ‘something is going on in our airspace.’

Fox News’ Chris Eberhart contributed to this report.

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The legal woes of Hunter Biden and today’s dropped plea deal likely accelerates the possibility of a formal impeachment inquiry by House Republicans.

Some Republicans were skeptical of launching any sort of inquiry – let alone impeaching the President.

But issues with the plea deal did nothing but pose more questions from Republicans. 

That’s why this likely spurs more serious conversation about impeachment inquiry.

This will be about the math.

The full House must vote to formally begin an impeachment inquiry. It’s fair to say that the House is a little closer to that now than it was before the Hunter Biden deal blew up. 

Moreover, voting to ESTABLISH an impeachment inquiry gives the House WIDE LATITUDE to go after more documents, information and conduct depositions. The Hunter Biden deal situation poses more questions than answers. So more Republicans may be inclined to pursue such a plan. 

Meantime, Democrats seem to be caught off guard by the change with Hunter Biden’s deal. They were prepared to just dismiss this and move on. But they can’t anymore. So far, Democrats have presented little cohesive strategy about how to deal with this turn events – and protect the president. 

We could hear more about this Thursday and Friday as this is the last time until mid-September that the House will be in town. 

Expect lawmakers to pepper House Speaker Kevin McCarthy (R-Calif.) about the next steps. And also, pose questions to Minority Leader Hakeem Jeffries (D-N.Y.) about the defense Democrats may need to mount on behalf of the president.

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The Department of Justice (DOJ) indirectly revealed Wednesday that President Biden’s son Hunter Biden is still under investigation for a potential violation of the Foreign Agents Registration Act (FARA).

During a contentious court hearing in a federal court in Wilmington, Delaware, federal prosecutor Leo Wise confirmed to Judge Maryellen Noreika of the U.S. District Court for the District of Delaware that the DOJ is still investigating Hunter Biden over a potential FARA violation. According to the DOJ, a willful violation of FARA could result in a five-year imprisonment and $250,000 fine, or both.

‘Yes,’ Wise stated after Noreika asked him whether the government could bring a charge against Hunter Biden related to FARA.

Wise’s affirmative response sparked a disagreement between prosecutors and defense counsel which ultimately led to the collapse of Hunter Biden’s plea deal. Chris Clark, an attorney representing Hunter Biden, remarked that the plea deal is ‘null and void.’

The hearing occurred Wednesday morning and was expected to be routine. 

Hunter Biden was expected to plead guilty to two misdemeanor tax counts of willful failure to pay federal income tax, as part of plea deal to avoid jail time on a felony gun charge. He was also expected to enter into a pretrial diversion agreement regarding the charge of possession of a firearm by a person who is an unlawful user of or addicted to a controlled substance.

‘Something is rotten in the state of Delaware, and the judge sniffed it out today. We’re thrilled her reasoning tracked with the arguments we laid out in our brief to the Court,’ Mike Howell, the director of the Oversight Project at the Heritage Foundation, told Fox News Digital.

‘Hunter Biden won’t be able to use this sweetheart plea deal as a get out of jail free card for any charges that may arise from the ongoing investigation into him,’ Howell added. ‘And that means that President Biden didn’t get a pass either.’ 

Republican lawmakers who are leading the congressional oversight investigation into the Biden family’s foreign business dealings similarly applauded Noreika’s questioning of the plea deal Wednesday. GOP leaders have loudly criticized the DOJ for putting the deal forward earlier this year after a multiyear investigation into the president’s son.

‘Today District Judge Noreika did the right thing by refusing to rubberstamp Hunter Biden’s sweetheart plea deal. But let’s be clear: Hunter’s sweetheart plea deal belongs in the trash,’ House Oversight and Accountability Committee Chairman James Comer, R-Ky., said in a statement.

‘No one should be above the law,’ House Ways and Means Committee Chairman Jason Smith, R-Mo., added. ‘Even if your last name is Biden.’

Congress enacted FARA to minimize the impact of foreign propaganda in the United States. It requires ‘certain agents of foreign principals who are engaged in political activities or other activities specified under the statute’ to update the Justice Department on their activities periodically. They must also provide receipts and disbursements regarding the work.

Failure to do so can result in up to five years in prison and hefty fines. The New York Post reported that potential charges would have to come soon, given that it carries a five-year statute of limitations and Hunter Biden left the Ukrainian gas company Burisma’s board in 2019. They also noted that its most lucrative Chinese government-linked partnership occurred in 2017 and 2018.

The White House, meanwhile, has continued to say it respects the independence of the DOJ and that there has been no interference from the president on behalf of his son.

‘Hunter Biden is a private citizen, and this was a personal matter for him. As we have said, the president, the first lady — they love their son and they support him as he continues to rebuild his life,’ White House press secretary Karine Jean-Pierre told reporters Wednesday. ‘This case was handled independently, as all of you know, by the Justice Department under the leadership of a prosecutor appointed by the former president, President Trump.’ 

The DOJ didn’t immediately respond to a request for comment from Fox News Digital.

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Homeland Security Secretary Alejandro Mayorkas was on the receiving end of another barrage from House Republicans on Wednesday as he faced the House Judiciary Committee and was quizzed about the administration’s efforts to tackle the border crisis.

‘I’ve been in Congress seven years. I think you’re the most dishonest witness that has ever appeared before the Judiciary Committee, and I think I speak for a lot of my colleagues,’ Rep. Mike Johnson, R-La., said. ‘This is such a frustrating exercise for us because our constituents want answers.’

The fireworks came as part of a House Judiciary Committee hearing on the department, which has been at the center of the handling of the ongoing crisis at the southern border in its third year.

Mayorkas has become a lightning rod for the crisis, with Republicans blaming him for running ‘open border’ policies they say sparked and then fueled the border crisis, which saw over 1.7 million migrant encounters in fiscal 2021 and over 2.4 million in fiscal 2022.

Republicans say that the rollback of Trump-era policies, including border wall construction, the Remain-in-Mexico policy and others, along with a reduction of interior enforcement and expansion of catch-and-release, has led to the historic surge. House Republicans have accused Mayorkas of dereliction of duty, with some backing a potential impeachment.

Mayorkas and the agency have pushed back consistently against those claims, arguing his agency is working in a broken system in need of reform by Congress while dealing with a hemisphere-wide crisis. The agency has pointed to a sharp drop in encounters after the end of the Title 42 public health order.

While encounters are still high, with over 144,000 in June, they were the lowest numbers since February 2021. It has led to claims by DHS that its post-Title 42 strategy is working. The strategy includes a historic expansion of the use of humanitarian parole to allow migrants in legally at ports of entry while limiting the ability of migrants who enter illegally to claim asylum.

‘Our approach to managing the borders securely and humanely even within our fundamentally broken immigration system is working,’ Mayorkas said. ‘Unlawful entries between ports of entry along the southwest border have consistently decreased by more than half compared to the peak before the end of Title 42.

‘Under President Biden’s leadership, we have led the largest expansion of lawful, safe and orderly pathways for people to seek humanitarian relief under our laws. At the same time, imposing tougher consequences on those who instead resort to the ruthless smuggling organizations that prey on the most vulnerable.’

But Republicans are unconvinced and have accused the administration of abusing parole, which is defined by Congress as an authority to be used on a case-by-case basis for urgent humanitarian purposes or for significant public benefit.

They have said the use of parole — which includes up to 1,450 a day at the border via the controversial CBP One app and a policy to fly in up to 30,000 a month from four countries — is illegal. 

Supporters of the use of parole by the administration have noted that multiple administrations have used it to grant relief on multiple occasions, including migrants fleeing Cuba and Vietnam and, most recently, ‘parole in place’ to prevent deportation of illegal immigrant family members of military veterans. Rep. Zoe Lofgren, D-Calif., noted it had been used as far back as the Eisenhower administration.

‘We have used our parole authority consistent with the law and consistent with past practices of different administrations,’ Mayorkas said.

Rep. Matt Gaetz, R-Fla., accused Mayorkas of orchestrating an ‘amnesty dance’ with the CBP One app, which allows migrants to come to the border and schedule appointments to be paroled into the U.S.

‘You’ve taken this app, and you’ve digitized illegal immigration. And you’ve scaled it to the moon,’ Gaetz said. ‘This app that you’ve got everybody downloading is like the Disney Fast Pass into the country, never to be subject to actual removal, just removal proceedings as you call them.’

‘I disagree with everything you said,’ Mayorkas responded.

Gaetz and Chairman Jim Jordan, R-Ohio, repeatedly grilled Mayorkas in an effort to get key data, including the number of migrants who have been released into the U.S. during the Biden administration and have now been removed.

‘Let me ask real quick: Can you get that number to us, like, tomorrow, or is it — you’ve got to go back and is it going to take weeks and months and haggling back and forth and all the letters we do? Congress writes letters to agencies, and we haggle back and forth, all that dance we have to do. Or can you just get us the number?’ Jordan said.

‘Mr. Chairman, we’ll provide that data to you as promptly as possible,’ Mayorkas responded.

Democrats generally praised Mayorkas for the work he is doing and attempted to push back against Republican talking points.

Ranking member Jerry Nadler, D-N.Y., accused Republicans of pushing a ‘dangerous’ narrative of an invasion at the border.

‘The invasion narrative some members push in this hearing room is bigoted, fact-free and dangerous,’ Nadler said, tying the rhetoric to the 2019 El Paso, Texas, shooting.

‘We can draw a straight line from the hateful rhetoric we hear from some congressional Republicans to that horrific tragedy.’

He also slammed Republicans for ‘outlandish claims’ made at the hearings, particularly claims the border is open. 

‘The border is not open, and to say so is not only false but is really an insult to the brave men and women at Border Patrol who work every day to keep us safe,’ he said.

But a number of Republicans doubled down on accusing Mayorkas of pushing ‘open border policies’ and expressed anger at what they saw as Mayorkas not answering any of their questions.

Rep. Victoria Spartz, R-Ind., at one point exploded at Mayorkas for his alleged lack of responsiveness.

‘You’re not answering questions,’ Spartz said. ‘You’ve not answered any Republican questions. Is it something that your intent is not to respond to any questions from Republicans? You came with that intent?’

‘That is incorrect, Congresswoman,’ he responded.

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New York City plans to shelter up to 1,000 migrants in the parking lot of Creedmoor Psychiatric Hospital in Queens.The temporary facility will exclusively house adult men.‘New York City continues to receive thousands of asylum seekers each week, and we have stepped up and led the nation, but this national crisis should not fall on cities alone to navigate,’ Democratic Mayor Eric Adams said in a statement. ‘We need a national solution here.’

New York City will set up a shelter for up to 1,000 migrants in the parking lot of a state psychiatric hospital as thousands of asylum seekers continue to arrive in the city weekly, officials said Wednesday.

The new emergency relief center at the Creedmoor Psychiatric Hospital in the Queens borough of New York will house adult men who are asylum seekers and will offer services including meals and medical care, the officials said.

‘This center will provide not just a place to stay but also critical services to support these individuals on their journey,’ Emergency Management Commissioner Zach Iscol said at a City Hall news conference.

New York state will provide the space at the 300-acre Creedmoor facility and will reimburse the city for setting the migrant center up and staffing it, Deputy Mayor for Health and Human Services Anne Williams-Isom said.

There are currently more than 56,000 migrants in New York’s care, with more people arriving daily, officials said.

Mayor Eric Adams has scrambled to house migrants while asking for help from the federal government.

‘New York City continues to receive thousands of asylum seekers each week, and we have stepped up and led the nation, but this national crisis should not fall on cities alone to navigate. We need a national solution here,’ the mayor said in a statement.

Adams, a Democrat, announced last week that some adult asylum seekers without children in the city’s shelter system would be given 60 days notice to find other accommodations in order to make room for families with children. Dr. Ted Long, senior vice president of the city’s public hospital system, which oversees the migrant shelters, said Wednesday that about 100 migrants have been given notice so far.

Officials said the Creedmoor migrant center should be up and running at some point next month.

Over the past year, New York City has rented out hotels to house migrants, and has placed asylum seekers in locations including a cruise ship terminal and a former police academy building.

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The potential collapse of Hunter Biden’s plea deal with prosecutors during a contentious court hearing in federal court in Delaware on Wednesday will likely provide Republicans with more ammunition as they aim to link President Biden to his son’s high-profile legal difficulties.

But looking ahead to the president’s 2024 re-election campaign, while Democratic strategists scoff at the notion that the younger Biden’s scandals could weaken his father’s bid for re-nomination and potentially help primary challenger Robert F. Kennedy Jr., a veteran political analyst told Fox News that ‘this is not a good situation for a man who’s weak in the polls and is running for re-election.’

Hunter Biden was expected to plead guilty to two misdemeanor tax counts of willful failure to pay federal income tax, as part of plea deal with federal prosecutors to avoid jail time on a felony gun charge. The younger Bien owned a handgun in 2018 – during a period where he’s admitted he was regularly using cocaine. That violates federal law, which prohibits drug users from possessing firearms.

But after the judge in the case refused to accept the plea agreement – due to questions of the constitutionality of the deal – Hunter Biden pleaded ‘not guilty’ as federal prosecutors confirmed the president’s son is still under federal investigation. 

Wednesday’s legal fireworks come after Internal Revenue Service (IRS) whistleblower testimony revealed allegations of Department of Justice misconduct throughout the years long investigation into the president’s son, which began during former President Donald Trump’s administration.

Hunter Biden’s foreign business dealing with Ukraine when his father was serving as vice president in the Obama administration are also in the spotlight. A separate whistleblower has alleged that the FBI and the Justice Department are in possession of an unverified document that claims a criminal scheme involving then-Vice President Biden and a foreign national relating to the exchange of money for policy decisions. 

And this week House Speaker Kevin McCarthy floated that the Republican majority in the chamber may consider an impeachment inquiry into the president over the unproven claims of financial misconduct.

‘There’s a lot of questions and we need some answers,’ Republican presidential candidate and former ambassador and former South Carolina Gov. Nikki Haley told Fox News Digital on Wednesday.

Haley argued that ‘now there’s enough questions and enough whistleblowers to say ‘OK, should there be a congressional inquiry into looking into this and I think that’s what Speaker McCarthy’s talking about and if he decides to go through the inquiry, it would totally be warranted.’

The White House has pushed back against Republicans, criticizing what it says were ‘unfounded, unproven, politically motivated attacks against the president and his family’ made ‘without offering evidence for their claims or evidence of decisions influenced by anything other than U.S. interests.’

Hunter Biden’s legal saga and the mounting inquiries come as the battle for the 2024 Republican presidential nomination is heating up, and as Biden faces longshot primary challenges from Kennedy – the environmental lawyer and high-profile vaccine critic, and scion of arguably the nation’s most famous family political dynasty – and best-selling author and spiritual adviser Marianne Williamson, who’s making her second straight White House run.

Fox News reached out to Kennedy’s campaign for reaction to Wednesday’s legal developments but didn’t receive a response by the time this story was published. 

But Kennedy, in a Fox News Channel interview this past weekend, said he backs McCarthy’s potential probe into the Bidens.

‘The issues that are now coming up are worrying enough that we really need a real investigation of what happened,’ Kennedy told host Maria Bartiromo on Fox News’ ‘Sunday Morning Futures.’

‘I mean, these revelations …where you have Burisma, which is this notoriously corrupt company, that paid out apparently $10 million to Hunter and his dad, if that’s true, then it is really troubling….So I think … it needs to be investigated,’ Kennedy said. 

Whether the controversy surrounding the Bidens will boost Kennedy’s bid against Biden is under debate in New Hampshire, which will likely be ground zero for attempts by Kennedy and Williamson to try and upend the president’s renomination.

Pointing to the president’s approval ratings – which have been underwater for nearly two years – and polls suggesting Democrats are anything but enthused with the 80-year-old Biden seeking a second four-year term in the White House, New Hampshire Institute of Politics executive director Neil Levesque told Fox News that ‘there is a lot of chatter right now and nervous Democrats concerned about Biden running anyway, and the polls indicate that.’

‘So if you add on any legal difficulties that his son might have that also tarnish the president’s image, it’s not good for him. This is not a good situation for a man who’s weak in the polls and is running for re-election,’ Levesque argued.

And he said that ‘every week that goes by where Hunter Biden has more legal troubles it creates a precarious position’ for the president.

But veteran political scientist Dante Scala of the University of New Hampshire disagreed, emphasizing that ‘until Democrats are confronted with incredibly solid evidence that the father himself has some wrongdoing in all this, their default is to confine the sins of Hunter Biden to Hunter Biden.’

‘Until something emerges that clearly shows that the president did something wrong here, I think Democratic primary voters shrug. Especially given the alternatives. The alternative in no way is Robert F. Kennedy or Marianne Williamson,’ Scala argued.

Voicing what many Democratic strategists are saying in a party that appears united behind the president, New England based Democratic consultant Joe Caiazzo told Fox News that ‘the reason why the Republicans are going after the president on Hunter Biden is because they cannot attack him on his record of governing because he’s been a success.’

‘I think Democratic primary voters are focused on making sure that we win back the House and keep control of the Senate and keep President Biden in the White House in 2024,’ added Caiazzo, a veteran of multiple Democratic presidential campaigns.

The behavior of some controversial Republicans in Congress may also be energizing Democrats to support Biden.

Pointing to conservative Rep. Marjorie Taylor Greene of Georgia, who is facing plenty of criticism for prominently displaying explicit photos of Hunter Biden at recent House Oversight and Accountability Committee hearing, a progressive activist in New Hampshire said when it comes to Democratic primary voters, ‘even if there was something on Biden, it’s lost in all the nonsense and false accusations.’

Fox News’ Brooke Singman and Aubrie Spady contributed to this report

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The Fed raised interest rates by 25 basis points—no surprise there. The stock market has priced in a 25-basis point rate hike, which will bring interest rates to the 5.25% to 5.5% range. That’s the highest the Fed funds rate has been in 22 years. Should we expect more rate hikes this year?

If you remember, in the last meeting, the Fed left rates steady, but indicated that we could expect two more 25-basis point increases in 2023. When Fed Chairman Jerome Powell takes the podium, investors will be listening for hints of whether there’ll be one more rate hike or if this will be it.

Alas, Chairman Powell’s language was similar to what he said in the last meeting. Even though inflation is cooling, it’s still above the 2% target. The US economy is growing at a modest pace, and the labor market remains very tight. For inflation to move lower, it could require below-trend growth and a softening of the labor market.

Powell mentioned that the Fed will take a data-dependent approach and continue to make decisions meeting by meeting. It’ll take time to see the full effects of the Fed’s monetary policy decisions, especially when it comes to inflation. When asked about when the Fed will stop raising rates, Powell responded by saying that they’ll stop raising rates when they’re comfortable with it.

Powell also doesn’t foresee a recession in the near future, but this view is far from being assured. There are still many uncertainties. He also doesn’t believe that many job losses are necessary for prices to fall to the Fed’s 2% target.

Is Inflation Cooling?

We have started to see signs of inflation cooling—CPI up 3% year-over-year and core CPI up 4.8% year-over-year—which is encouraging. But one month’s data doesn’t set a trend. Remember, energy prices fell over 16% on an annual basis. Compare that to the 5.7% rise in food prices over the last 12 months.

Energy makes up a significant portion of household expenses and, with energy prices coming off their lows (see chart of Energy Select Sector SPDR ETF, XLE, below), it remains to be seen if the cooling inflation was a one-off.

CHART 1: ENERGY SELECT SECTOR SPDR ETF (XLE) CONTINUES TO RISE. Keep an eye on XLE since its price action could impact inflation data in the next few months.Chart source: StockCharts.com (click on chart for live version). For educational purposes.XLE has broken above a downward-sloping trendline and is trading above its 200-day simple moving average. The On Balance Volume (OBV) indicator in the lower panel is trending higher, which means volume on up days is greater than volume on down days. As long as the uptrend is supported, it’s safe to assume that energy prices will rise.

The Big-Picture View 

While the general feeling is that the US will avoid a recession, there are a few areas that investors should watch—home prices, consumer confidence, and the labor market.

Home prices in May were lower than a year ago, according to S&P CoreLogic Case Shiller Indices data, but stronger than expected.Consumer confidence increased to 117 in July, the highest level in two years.The labor market hasn’t shown signs of cooling. Wage growth has been fast—hourly earnings in June rose 4.4% annually.

The core Personal Expenditures (PCE) Price index for June will be released on Friday. The Fed watches the PCE closely, and, in May, it rose 4.6%, which is still a ways away from 2%. For as long as supply and demand in the labor market are not in balance, inflation is likely to remain above the Fed’s 2% target.

The stock and bond markets didn’t react much following the Fed’s rate decision. However, after Powell’s presser, the Dow Jones Industrial Average ($INDU) climbed higher, pulled back, and managed to clinch its 13-day winning streak, something it hasn’t done since 1987.

CHART 2: 13-DAY WINNING STREAK FOR THE DOW JONES INDUSTRIAL AVERAGE. After Powell’s speech $INDU spiked briefly but pulled back. However, it managed to close higher and maintain its winning streak.Chart source: StockCharts.com (click on chart for live version). For educational purposes.

And How Are the Gold Bulls Responding?

Recently, there have been two things supporting bullish gold sentiment:

First, the hope that the Fed’s tightening cycle will finally come to an end; andSecond, that the threat of an impending recession still hangs in the air.

JPMorgan Chase (JPM) shares this view. It predicts the Fed will lower interest rates by Q2 2024, which would result in lower real US yields and higher gold prices.

The bank sees COMEX gold ($GOLD) hovering around $2,012 an ounce by the second half of this year (currently 2% above current prices) and, should the US economy fall into a recession, around $2,175 by the end of 2024 (10% above current prices).

For SPDR Gold Trust ETF (GLD), that translates to a price target of $201 by the end of 2024.

Other hedge funds and institutions seemed to have jumped onto this golden bandwagon as well. The most recent Commitments of Traders report from the CFTC tells us that money managers made more bets that gold (futures) would go up. The gold futures market now has 115,318 more long contracts than short ones, meaning that the overall market mood has been the most bullish it’s been since early March 2022.

Gold ($GOLD) and GLD has been on a four-week uptrend, but the near-term fate of gold prices depends on how closely Fed Chair Jerome Powell’s guidance matches gold bull expectations. The 25-basis point rate hike didn’t get much reaction from the gold market, as Powell’s “data-dependent” spiel kept gold bulls and bears in a holding pattern.

CHART 3: WHAT’S A POTENTIAL PRICE TARGET FOR GLD? The upside targets for GLD are displayed in blue, and the green line represents the JPM 2024 target-equivalent. The red dashed lines represent bearish targets.

Chart source: StockChartsACP. For educational purposes.

On the technical front, the bulls still hold the advantage. Their objective is to push gold prices above the near-term and historical resistance between $191.00 and $193.00 (see blue dotted lines). The equivalent to the JPMorgan Chase COMEX gold ($GOLD) target is represented by the green dotted line at $201.00.On the downside, bears’ objective would be to see GLD prices decline to support near $175.00 and $168.00, as shown in the chart (see red dotted lines).

Similar to the Fed itself, gold bulls and bears will have to monitor the forthcoming inflation and labor market reports to adjust their positions accordingly. Onerous, possibly, but necessary, yes (that is, if you want to stay at the edge of the curve).

The Bottom Line

The next Fed meeting is in September. There are still two CPI and PPI (in addition to several labor market) reports ahead of the next FOMC meeting. And, as Powell reiterated, the full impact of the Fed’s rate hikes has not yet been felt in the economy, as it usually takes six months to a year for a rate hike to have a full effect. Till then, it’s best to take a day-to-day approach.

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

A year ago, I noted that the inverted yield curve was saying that a bottom for stock prices could be expected in 2024. But the important caveat to that expectation was that it depended upon the yield curve finishing its inversion then. What has happened instead is a furthering of that inversion, which will add fuel to the coming bear market and which postpones its end date.

In the chart above, I am modeling the entirety of the yield curve by comparing just two rates: the 10-year and 1-year T-Note yields. Picking just two gives us the ability to calculate a spread between them, which makes for a nice display on a 2-dimensional chart. The actual “yield curve” consists of all possible market yields on bonds from the shortest to longest maturities.

The key point in the first chart above, which compares that 10y-1y spread, is that I have shifted forward that yield spread plot by 22 months. This helps to reveal how the stock market responds with a delay to the inversion of the yield curve. And the moment of the greatest inversion is the key moment to count forward from, because stock market bottoms tend to arrive about 22 months later, on average.

We do not know yet when the most extreme point will be reached for the 10y-1y yield spread. But if it was today, then that would mean a stock market bottom in roughly May 2026. If the Fed keeps pushing up the short end of the maturity spectrum, as they did with the July 26, 2023 additional quarter point hike from the FOMC, then that postpones that bottom date for the stock market even further.

It is worth noting a glaring exception to this 22-month lag principle. We saw a very minor yield curve inversion in August to September 2019, which should have meant a bottom for the stock market ideally in June to July 2021. But we saw the bottom come much earlier, in March 2020, thanks to the arrival of COVID and the decisions by our governmental leaders to first shut down the economy (2 weeks to stop the spread), and then to shove a firehose full of money into the economy’s mouth. Those actions pulled forward the stock market bottom that ideally should have come in 2021.

While the stock market reacts to the yield curve with a lag, there is another very important relationship regarding the yield curve, which acts on a coincident basis:

The yield curve and the unemployment rate are very tightly correlated. But, when thinking about cause and effect, the yield curve is not the causative agent. The yield curve gets changed mostly by Fed action, and the policy makers react to what unemployment is doing. When unemployment is rising, the Fed will cut short-term rates, steepening the yield curve. And they do the opposite when unemployment is low, based on their belief that this will somehow help to remediate inflation. My longtime readers know that the Fed is not really in charge of inflation, as discussed here.

The key point to notice, though, in this comparison of the 10y-1y spread to the unemployment rate is that EVERY TIME we see an inverted yield curve, it produces a dramatic rise in the unemployment rate in the months that follow. This time, the unemployment rate is taking a while to respond, which is great for those who still get to have jobs. The Fed seems to think that perhaps this time is different, and they can bring about a “soft landing” or “no landing” scenario regarding unemployment. History says that is a pretty foolish belief. Unemployment going up has always signaled that the end of the inverted yield curve is upon us.

After the Fed meeting, we thought it would be useful to see the July calendar ranges and give you a brief lesson in how to use them. Who is this for?

The price levels defined by this trading method have proven to be insightful in all markets. Longer-term investors can use this to identify longer-term trend inflection points. Active investors can use the price levels identified by the July Range as entry points for trades that can last days, weeks, or months.

Focusing on the July Calendar Range Breakout only:

  • The “Close & Continue” Breakout Pattern

“Close” outside the range “Continue:” Trade beyond the range of the breakout day

With an intra-day 30-min Opening Range breakout:

 • Stop levels

Close back in the range Move below (above) the range of the day that broke out Close & continue beyond the opposite range level

Looking at the SPY chart, we have had 7 trading days above the range high. However, to date, SPY has not really taken off from that level and sits more in consolidation mode.

451.93 is the green line or 6-month calendar range high. Should it hold, we would maintain a positive bias. Should it fail, we would most likely exit any long SPY position. And, should it continue to fail below the range high, we would consider that a potential short and perhaps top for the market-until such time-the price comes back above that level. At that point, the July 6-month calendar range low at 437.06 comes into focus.

Pay attention to the 6-month January 2023 calendar range as well as the July 2022 6-month calendar range. Most types of investors had lots of trading opportunities around these lines in the sand.

See more:

NASDAQ is already below its July 6-month calendar range. We are now watching the low at 363.41 as the next point. A break below would tell us the uptrend, for now, is over.

The Russell 2000 looks similar to the SPY chart. Currently trading above the 6-month range, the bias is positive unless the July range high breaks. Notice the distance between the July 6-month range high and low. That tells us that even with a break below, we have substantial room to fall without breaking the overall uptrend. This is unique to IWM, our main index focus for the 2nd half of 2023.

The most interesting chart for us is the long bonds or TLT chart. The “higher for longer” folks want to see TLT break under the July range low or 98.85. The “last rate hike before a pause and a pivot” crowd will want to see TLT clear above the July range high or 103.26. Note that once TLT failed the January 6-month calendar range high, it tested and held the 6-month calendar range low.

Now, with a new range, hopefully the next direction for bonds and rates will become clearer.

This daily is an abbreviation of MarketGauge’s 6-Month Calendar Range strategy setup and indicators. This strategy, tactics used to trade it, and market scans used to identify trading opportunities are covered in our ‘Complete Trader’ and ‘Mish’s Training’ programs. If you’d like to take this to the next level with more detailed instruction, the indicators, additional trade ideas, and live mentoring…

Click here to learn more: http://www.marketgauge.com/calendar-ranges

For more detailed trading information about our blended models, tools and trader education courses, contact Rob Quinn, our Chief Strategy Consultant, to learn more.

“I grew my money tree and so can you!” – Mish Schneider

Get your copy of Plant Your Money Tree: A Guide to Growing Your Wealth and a special bonus here.

Follow Mish on Twitter @marketminute for stock picks and more. Follow Mish on Instagram (mishschneider) for daily morning videos. To see updated media clips, click here.

Mish in the Media

This has been a very heavy week with the Fed meeting, tons of earnings, and, not to mention, all of the geopolitical issues around the world. Something that Mish has been thinking a lot about is store houses for raw materials, the places that actually hold every kind of raw material from mining, commodity trading houses etc. Mish dives into the stocks she’s looking at on the Wednesday, July 26 edition of StockCharts TV’s Your Daily Five.

Mish looks at a selection of popular instruments and outlines their possible direction of travel in this video from CMC Markets.

In this episode of The Breakfast Show from Money FM 89.3 Singapore, Mish makes sense of the recent resilience and worrisome trends in the market, delving on the various factors driving consumer confidence in the face of rising rates and inflation, the impact of A.I.-driven companies, and the ongoing geopolitical risks on commodities and equities.

Mish talks PCE inflation picks in this video from Business First AM.

Mish covers gold, oil, grains and the SPX — all actionable — in this video from CMC Markets.

Mish discusses recession, inflation, and AI picks on the open with BNN Bloomberg.

Mish and Angela Miles discuss the next moves for your money on Business First AM.

Mish talks her approach to being a professional trader in this Options Insight interview with Imran Lakha.

Nicole Petallides and Mish discuss crypto, basic materials, inflation and gold in this appearance on TD Ameritrade.

Mish and Ash Bennington cover a lot in this video from Real Vision, discussing everything from the Fed, to inflation, to the incredible move in stocks and what is next.

Mish talks day-trading tactics, currency pairs, gold, oil, and sugar futures in this video from CMC Markets.

Mish and Angie Miles talk tech, small caps and one new stock in this appearance on Business First AM.

Mish examines the old adage “Don’t Fight the Fed” in this interview on Business First AM.

Mish and Charles Payne talk the Fed, CPI, Inflation, yields, bonds and sectors she likes on Fox Business’ Making Money with Charles Payne.

Mish, Brad Smith and Diane King Hall discuss and project on topics like earnings, inflation, yield curve and market direction in this appearance on Yahoo Finance.

Coming Up:

July 27: Live Coaching

July 28: IBD Live

ETF Summary

S&P 500 (SPY): 452 July calendar range high now support.Russell 2000 (IWM): 193 is the 23-month holy grail.Dow (DIA): 35,000 support.Nasdaq (QQQ): Under its 6-month calendar range high, already showing signs of stress.Regional Banks (KRE): Consolidating over its July calendar highs; positive.Semiconductors (SMH): Holds here okay; needs to clear 161, under 147 trouble.Transportation (IYT): No UPS strike helped.Biotechnology (IBB): 128 support now to hold.Retail (XRT): Rally to the July 6-month calendar range high — now the fun begins.

Mish Schneider

MarketGauge.com

Director of Trading Research and Education