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The dominant narrative among investors and funds, at least in my domain (web3, tech investing) has been that "Fed will pivot soon, and the party will start anew

by spaceman_2020 4y ago

The dominant narrative among investors and funds, at least in my domain (web3, tech investing) has been that "Fed will pivot soon, and the party will start anew". As long as that narrative remains strong, nobody will dump everything. New investment might stall, but no panic in the ranks. The real panic will set when the pivot does not happen. Or if it does happen and inflation comes roaring back, leading to a longer and deeper rate hike.

jotorTheOlord 4y ago
Let’s hope the inflation comes back and deeper rate hikes destroy SaaS. It’s rent seeking. The internet does not need landlords. Technology is great, discovery is great; politically correct economic traditions of enabling a minority that can email 20-30 minutes a day and fuck off to the beach with their friends was a huge problem. The rest of society will not tolerate austerity for them and privilege for prince and princess billionaire heirs as generational churn reshapes political power. Our statistical tools are curious indeed but the wrong tools for management of living, breathing, beings, and humans have a long history of belief in false prophets that we barely just consciously began moving away from (Vint, Gates, Jobs; they did not invent computing or even transmitting coded signals as electrons through a medium). It’s a hard sell our leaders steeped in a less tolerant, post war shell shocked, Cold War paranoid era, huffing leaded gas fumes, are of “the right stuff” to still dictate our agency.
birdymcbird 4y ago
“Soon” is mid 2024 at the earliest. The start ups haven’t really even begun to trim fat. Big tech like amazon, meta, google will increase attrition targets in addition to actual layoffs. I could turn out to be wrong but id bet there’s many more waves of cascading pain before before things turn other way. Turning other way doesnt mean we immediately go back to excess hiring, empire building, lack of focus, free uber rides and oat milk lattes. will be long while before market turns in favor of employees.
- fosk 4y ago
  Contrarian signal, for the sake of having a conversation: - I think we will experience a massive deflationary bust. The inflation narrative is over, it’s all about a potential recession now. - By Summer 2023 we will experience YoY deflation and the Fed will cut then, or even sooner in anticipation to that. - We may see hikes pausing as soon as February, and cuts starting in the summer as a result of rapid disinflation (which may turn into deflation). Deflation is a lot worse than inflation. - We find out that the bulk of inflation was indeed caused by supply chain bottlenecks. As China fully re-opens, those will be resolved. - Russia’s war with Ukraine will end (Putin is now agreeing to potentially think about negotiations). Oil prices will ease
  - laidoffamazon 4y ago
    Oil prices already eased, we're refilling the SPR at a significant profit at the ~73$ floor.
  - voisin 4y ago
    > The inflation narrative is over, it’s all about a potential recession now. You can have stagflation: a recession with inflation. This is the economic boogeyman that literally every central banker has worried about for his or her entire career. Inflation is certainly not “over” - still running extremely hot relative to the last decade. Better than before the rate hikes, but by no means good or over.
    - cmmeur01 4y ago
      Any normal time period would be considered “extremely hot” compared to the last decade+ of artificially low rates.
      - voisin 4y ago
        Can you expand on why you think inflation was “artificially low”?
voisin 4y ago
> Or if it does happen and inflation comes roaring back, This happened in the late 70s/early 80s. Volcker made this mistake and had to jack rates a second time leading to a second recession deeper and longer than the first. The current Fed has referred to this in recent speeches. I don’t think they’ll make the same mistake.
- nemo44x 4y ago
  Agreed. Powell’s recent comments about staying the course contrasted with sudden expectations they may stop raising rates now. He sounds serious about not making that mistake. However, he’s likely making sone other mistake we can’t be sure about but will reveal itself down the road.
ngoilapites 4y ago
I do not see any reason to think FED will pivot in a 2-3 y horizon.

jotorTheOlord 4y ago

Let’s hope the inflation comes back and deeper rate hikes destroy SaaS. It’s rent seeking. The internet does not need landlords. Technology is great, discovery is great; politically correct economic traditions of enabling a minority that can email 20-30 minutes a day and fuck off to the beach with their friends was a huge problem. The rest of society will not tolerate austerity for them and privilege for prince and princess billionaire heirs as generational churn reshapes political power. Our statistical tools are curious indeed but the wrong tools for management of living, breathing, beings, and humans have a long history of belief in false prophets that we barely just consciously began moving away from (Vint, Gates, Jobs; they did not invent computing or even transmitting coded signals as electrons through a medium). It’s a hard sell our leaders steeped in a less tolerant, post war shell shocked, Cold War paranoid era, huffing leaded gas fumes, are of “the right stuff” to still dictate our agency.

birdymcbird 4y ago

“Soon” is mid 2024 at the earliest. The start ups haven’t really even begun to trim fat. Big tech like amazon, meta, google will increase attrition targets in addition to actual layoffs. I could turn out to be wrong but id bet there’s many more waves of cascading pain before before things turn other way. Turning other way doesnt mean we immediately go back to excess hiring, empire building, lack of focus, free uber rides and oat milk lattes. will be long while before market turns in favor of employees.

fosk 4y ago
Contrarian signal, for the sake of having a conversation: - I think we will experience a massive deflationary bust. The inflation narrative is over, it’s all about a potential recession now. - By Summer 2023 we will experience YoY deflation and the Fed will cut then, or even sooner in anticipation to that. - We may see hikes pausing as soon as February, and cuts starting in the summer as a result of rapid disinflation (which may turn into deflation). Deflation is a lot worse than inflation. - We find out that the bulk of inflation was indeed caused by supply chain bottlenecks. As China fully re-opens, those will be resolved. - Russia’s war with Ukraine will end (Putin is now agreeing to potentially think about negotiations). Oil prices will ease
- laidoffamazon 4y ago
  Oil prices already eased, we're refilling the SPR at a significant profit at the ~73$ floor.
- voisin 4y ago
  > The inflation narrative is over, it’s all about a potential recession now. You can have stagflation: a recession with inflation. This is the economic boogeyman that literally every central banker has worried about for his or her entire career. Inflation is certainly not “over” - still running extremely hot relative to the last decade. Better than before the rate hikes, but by no means good or over.
  - cmmeur01 4y ago
    Any normal time period would be considered “extremely hot” compared to the last decade+ of artificially low rates.
    - voisin 4y ago
      Can you expand on why you think inflation was “artificially low”?

voisin 4y ago

> Or if it does happen and inflation comes roaring back, This happened in the late 70s/early 80s. Volcker made this mistake and had to jack rates a second time leading to a second recession deeper and longer than the first. The current Fed has referred to this in recent speeches. I don’t think they’ll make the same mistake.

nemo44x 4y ago
Agreed. Powell’s recent comments about staying the course contrasted with sudden expectations they may stop raising rates now. He sounds serious about not making that mistake. However, he’s likely making sone other mistake we can’t be sure about but will reveal itself down the road.

ngoilapites 4y ago

I do not see any reason to think FED will pivot in a 2-3 y horizon.