The Fed concluded its latest Federal Open Market Committee (FOMC) policy-setting meeting today. As was widely expected, the decision makers chose to stand pat.

In its policy statement, the FOMC acknowledged a slowdown in economic activity but described continued strengthening in the labor market and stated that “fundamentals underpinning continued growth of consumption remained solid.” First-quarter GDP growth slowed to an annual rate of 0.7 percent, the lowest mark in 3 years, but the Fed dismissed the slowdown as “likely to be transitory.”

The markets largely shrugged off last week’s disappointing 0.7 percent GDP-growth reading, blaming the soft reading on unseasonably warm weather that reduced consumer spending on utilities and on the Department of Commerce’s tendency to consistently estimate first-quarter growth at lower levels than seen in other quarters. Fed Chair Janet Yellen has recently stated that quarterly GDP is a “noisy” number, so it’s not surprising that the Fed seems to not give much weight to the first-quarter GDP miss.

Yellen and her lieutenants appear to remain on course to raise the federal funds rate two more times (assuming quarter-point moves each time) this year, which would put the benchmark rate at a range of 1.25 percent to 1.50 percent at yearend. At 1.50 percent, it would mark the highest level for the federal funds rate since late 2008, but that level would still be historically very low.

In regards to faster economic growth, we continue to wait for a more detailed infrastructure plan from President Trump because we believe infrastructure investment and development is one of the surest ways to boost productivity and growth. The White House did unveil an updated version of its tax-cut plan last week, but it was short on details and similar to the one Trump’s camp released during the campaign last fall, even in length (one page). The notable differences are the plan no longer sets the income ranges where the tax brackets will be set and state and local tax deductions are subject to elimination.

Treasury Secretary Steve Mnuchin defended the plan’s lack of details by saying it was purposely vague in order to give the White House room to work with Congress. Although the broad tax cuts sound good, exactly how they can be implemented without causing the already large deficit to massively balloon further is unknown. As with the health-care bill that went no where (though the GOP are still working on a revival), the tax-cut plan likely has a long road ahead of it.   

The SPDR S&P 500 ETF (SPY) June 220 put remains a hold. This is not an indicator-based trade, but rather an ongoing hedge against the market. We may roll this over into a longer-dated put option. 

Our gold, silver, and gold stocks indicator signals continue to be on the bearish side. We reiterate that we continue to believe precious metals will be among the best performers in the long run. Whether the stock market continues to defy gravity or not, global economic developments continue to point toward resource scarcity and inflation, driven by intense development in the East, spread-headed by China. In such an environment, gold and silver should do very well.

We continue to hold the junior miner stocks as a de-facto perpetual call on the Midas Metal.

Besides the options, we currently hold open (long) positions in the following stocks: NovaGold (NG), Gabriel Resources (GBRRF), Schlumberger (SLB) and Trilogy Metals (TMQ). In contract to the option trades, these holdings are meant to be long-term holdings.