7% Interest Rates
Yesterday the Fed floated the idea. Could it actually happen? What would the consequences be?
Friend of Fringe Finance and well known financial news contributor - as well as 38 year veteran of markets - Kenny Polcari has been kind enough to share his most recent thoughts on the market with our readers.
For those who aren’t familiar with Kenny or don’t recognize him from TV, he is Managing Partner of Kace Capital Advisors and Chief Market Strategist at SlateStone Wealth. He started his career on the floor of the New York Stock Exchange (NYSE) as an institutional broker back in the early eighties when the march of electronic trading was already taking its first steps, and the great bull was first learning to run.
Here’s his take on markets heading into the Friday, November 18, 2022, trading day:
The post has been lightly edited for punctuation and grammar.
Bullard Suggests 5% to 7% Rates?
Now the Fed has sent out the big guns.
St. Louis Fed President Jim Bullard told it like it is yesterday, saying that ‘interest rates have to rise even higher to restrict the economy to the extent that it brings inflation back down to the target’.
The target for inflation is 2%, which isn’t news at all. But the fact is that many don’t believe [the Fed], despite Kashkari and Mester confirming what Bullard said. Talk of a pivot/pause is all the rage right now, and it’s why we’ve seen the S&P rally 14% since the October low. The Dow is +18%, the Nasdaq +13%, The Russell +14% and the Transports +22% over the same period.
What doesn’t help? Ongoing mixed messages that each of the talking heads tell us. Let’s discuss what’s new this morning.