They won’t raise rates because they want to clean up their portfolios and those of their buddies before they move rates up. “It’s a club and you and I aren’t in it” George Carlin
Gone are the days when Greenspan would wax eloquently - no more, no less.
Today it reminds me of high school when all the feckless idiots cling together out of fear and then use their clique to push out their thoughts on others.
My science fiction novel on how it ends –
Some spark somewhere related to overnight rates spiking will start the dominos falling and then crash the system.
A couple days to a couple weeks and the whole thing will turn to ashes.
Look how astonishingly robust the market has been: a major European regional war; a threat to the dollar's reserve status; coronavirus; Chinese threats over Taiwan; even the threat of nuclear missiles ! And yet we haven't fallen that far since December last year. What resilience. What will it take to achieve value in the indexes. I think the dollar is the key and the way China responds to its growing internal problems. We overestimate the Fed. It has already caused the damage. It's all priced in, even the reversal of its counter inflation policy is priced in ! One last hurrah I think, a final ATH (so the grandees can get their money back) and then a sprint back to mean reversion at high speed. Your guess as good as anyone's as to what will cause the hypersonic drop but cause and effect are hard to separate in a market like this. Oliver
The jawboning of the Fed has clearly worked when you look at the 2s or at the Wu-Xia Shadow Rate (up >200 bps). That doesn't look like the Fed has lost its credibility, and calling that "scared shitless" is a bit of an exaggeration.
But I do agree: it's not going to be a soft landing.
I'm not saying you are wrong. It may come very well as expected from you. But put it this way, there have been some traders out there before feeling smarter than the rest of the market (and the FED). Again, not an advice, only my point of view, whenever I open a position I try to find arguments that speak AGAINST this position (thanks Charly). Repeating my own theory or setup again and again will not make the market fall and believe me, I tried again and again ;-)
Certainly an exciting time to watch the markets. Since you mentioned will smith, I think he is playing the role of market reality while Chris Rock has the unfortunate role of Jerome. 😉
We’ve quadrupled the money supply over the last couple of years ($5T to $20T) with all the “free” money being handed out. Our president’s solution to this problem is to massively raise taxes and create even more money to hand out. Somebody turn out the lights, the party’s over.
Fed is gutless and clueless. Problem: Fed can't print oil. Solution: None. Keep a journal, cause the coming decade is going to be a shark-nado train-wreck. By the end of the decade, "economist" is going to be synonymous with "dipshit"
3 straight one point hikes, continue cutting the balance sheet and target 6% on the 10 yr. If someone was in charge the outcome would be: offset the 50% increase in the housing market of the last couple years, tick up UI rate to 5% and send a signal to voters / congress that fiscal conservatives are once again necessary for the peoples money (sorry, this post was written during a dream state).
They are stuck between the rock and the hard place, dammed if you do and dammed if you don't. I am sick of the world being run by bankster gangsters. Do they want to crash all the markets and what is left of the "economy"? That is a real possibility if you believe they are working together to have their "New World Order".
I fear that fed commentary has been drastically altered by the chaotic events in 2018. Since then, the fed has seemingly rotated from the dual mandate (inflation + employment), to the triple mandate- fearing and/or supporting the markets. This has created the current zero-sum game the Fed currently is stuck in. There is no way out and anybody claiming there will be a soft landing is just another violinist on the Titanic. The ship will certainly sink; the only question is, will the fad crank out the life vests and balloon the balance sheet again in the face of a rapidly deteriorating economic outlook
Remember back in 2020 when all we heard was "the economy will come ROARING back by Fall"?
Too many people to count said, don't do this stupid shit, it's gonna blow everything up! No, no... foolish little people. The elite class knows what's best for us. Roaring... I tell you. It will roar.
I think if the FED wanted to raise rates it would have already. "if you want to shoot, shoot, don't talk". It's going to put in a few symbolic hikes with ample warning to make a valiant effort, but it cannot afford to get in front of this freight train in an election year. nor any other year.
take a stab at what happens next? 2018 re-run of hikes with eventual capitulation? hike and balance sheet roll off in the face of fiscal expansionary policy into unavoidable recession?
They won’t raise rates because they want to clean up their portfolios and those of their buddies before they move rates up. “It’s a club and you and I aren’t in it” George Carlin
Gone are the days when Greenspan would wax eloquently - no more, no less.
Today it reminds me of high school when all the feckless idiots cling together out of fear and then use their clique to push out their thoughts on others.
My science fiction novel on how it ends –
Some spark somewhere related to overnight rates spiking will start the dominos falling and then crash the system.
A couple days to a couple weeks and the whole thing will turn to ashes.
Look how astonishingly robust the market has been: a major European regional war; a threat to the dollar's reserve status; coronavirus; Chinese threats over Taiwan; even the threat of nuclear missiles ! And yet we haven't fallen that far since December last year. What resilience. What will it take to achieve value in the indexes. I think the dollar is the key and the way China responds to its growing internal problems. We overestimate the Fed. It has already caused the damage. It's all priced in, even the reversal of its counter inflation policy is priced in ! One last hurrah I think, a final ATH (so the grandees can get their money back) and then a sprint back to mean reversion at high speed. Your guess as good as anyone's as to what will cause the hypersonic drop but cause and effect are hard to separate in a market like this. Oliver
Chris you gotta have faith, they look busy and they must know what they are doing! 😆
The jawboning of the Fed has clearly worked when you look at the 2s or at the Wu-Xia Shadow Rate (up >200 bps). That doesn't look like the Fed has lost its credibility, and calling that "scared shitless" is a bit of an exaggeration.
But I do agree: it's not going to be a soft landing.
I'm not saying you are wrong. It may come very well as expected from you. But put it this way, there have been some traders out there before feeling smarter than the rest of the market (and the FED). Again, not an advice, only my point of view, whenever I open a position I try to find arguments that speak AGAINST this position (thanks Charly). Repeating my own theory or setup again and again will not make the market fall and believe me, I tried again and again ;-)
Certainly an exciting time to watch the markets. Since you mentioned will smith, I think he is playing the role of market reality while Chris Rock has the unfortunate role of Jerome. 😉
We’ve quadrupled the money supply over the last couple of years ($5T to $20T) with all the “free” money being handed out. Our president’s solution to this problem is to massively raise taxes and create even more money to hand out. Somebody turn out the lights, the party’s over.
Fed is gutless and clueless. Problem: Fed can't print oil. Solution: None. Keep a journal, cause the coming decade is going to be a shark-nado train-wreck. By the end of the decade, "economist" is going to be synonymous with "dipshit"
3 straight one point hikes, continue cutting the balance sheet and target 6% on the 10 yr. If someone was in charge the outcome would be: offset the 50% increase in the housing market of the last couple years, tick up UI rate to 5% and send a signal to voters / congress that fiscal conservatives are once again necessary for the peoples money (sorry, this post was written during a dream state).
They are stuck between the rock and the hard place, dammed if you do and dammed if you don't. I am sick of the world being run by bankster gangsters. Do they want to crash all the markets and what is left of the "economy"? That is a real possibility if you believe they are working together to have their "New World Order".
I fear that fed commentary has been drastically altered by the chaotic events in 2018. Since then, the fed has seemingly rotated from the dual mandate (inflation + employment), to the triple mandate- fearing and/or supporting the markets. This has created the current zero-sum game the Fed currently is stuck in. There is no way out and anybody claiming there will be a soft landing is just another violinist on the Titanic. The ship will certainly sink; the only question is, will the fad crank out the life vests and balloon the balance sheet again in the face of a rapidly deteriorating economic outlook
Remember back in 2020 when all we heard was "the economy will come ROARING back by Fall"?
Too many people to count said, don't do this stupid shit, it's gonna blow everything up! No, no... foolish little people. The elite class knows what's best for us. Roaring... I tell you. It will roar.
Forgot about the Wopner tweet. Powell’s taking down a lot of other people’e credibility with him, and it’s glorious.
I think if the FED wanted to raise rates it would have already. "if you want to shoot, shoot, don't talk". It's going to put in a few symbolic hikes with ample warning to make a valiant effort, but it cannot afford to get in front of this freight train in an election year. nor any other year.
take a stab at what happens next? 2018 re-run of hikes with eventual capitulation? hike and balance sheet roll off in the face of fiscal expansionary policy into unavoidable recession?