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Sure cause this time for the first time in 20 years the federal reserve is actually going to do what they say...not. We'll be back to zero and negative is comi
by jarsin 4y ago
Sure cause this time for the first time in 20 years the federal reserve is actually going to do what they say...not.
We'll be back to zero and negative is coming folks.
- silisili 4y agoIn what time frame?
- latency-guy2 4y agoGood point, maybe the 'inflation is transitory' crowd can chime in as well
- jarsin 4y agoBack to zero by end of year. Negative in response to deflationary bust next year.
- JumpCrisscross 4y ago> zero by end of year This is what the stock market is betting, and being continuously disappointed, on. It’s a hell of a bet, and I think it’s dead wrong.
- jarsin 4y agoMarket double bottomed June/Oct at 3600. Now 4100. Not seeing the disappointment. Mr. Market has you right where it wants you, on the sidelines or short.
- JumpCrisscross 4y ago> Now 4100. Not seeing the disappointment Yes, when rates are cut valuations go up. This is finance 101. American stocks are rich because a recession and low rates are priced in. If that doesn’t happen, if rates go where the Fed forecasts, the market needs to drop. You’re in good company, by the way. Prominent managers are long equities and quality credit [1] on the hypothesis that rate cuts will keep valuations buoyed. (It’s also why the curve is inverted [2].) This is the dominant financial debate du jour. The market (specifically: professional money managers) are fighting the Fed. (My belief is this is more tied to fees and AUM than a fundamental read on the economy.) [1] https://www.ft.com/content/e3d5ee33-5cc6-4be5-bf68-fcd92a75b950 https://www.ft.com/content/e3d5ee33-5cc6-4be5-bf68-fcd92a75b... [2] https://www.bloomberg.com/news/articles/2023-02-09/treasury-yield-curve-inversion-reaches-deepest-level-since-1980s https://www.bloomberg.com/news/articles/2023-02-09/treasury-...
- paganel 4y agoSlightly OT but related to your links, can you say that the FT has maintained its "impartiality" (for lack of a better word) in its finance and economics section? I'm asking because I used to read the FT on and off for 15 years going on 20 now, but the last couple of years have been really dire in terms of their biases and their lack of impartiality (especially in the politics and the international sections). At the same time your links made me miss their finance pieces, which I agree most of the times might have looked very "dry" but for a person outside finance (like I am) they were illuminating nonetheless. I'd go back to reading the FT again just for those.
- JumpCrisscross 4y ago> especially in the politics and the international sections Most British coverage of American politics is abysmal. For international, the FT has biases, but they tend to get the facts straight. (Definitely Eurocentric.)
- drexlspivey 4y agoNo one is betting on this. The implied interest rate for end of year based on market data is 5%
- kasey_junk 4y agoWhile that’s not 0 that does seem low given the fed has said they are setting it higher than that. The market has been undershooting the whole time the fed has been raising rates. It’s a little strange frankly.
- lotsofpulp 4y agoSource for Fed stating they are setting fed funds rate higher than 5%? 5% and 0% are already world apart given the last two decades.
- drexlspivey 4y agoThe expectation is to go higher and then lower, for example after the September meeting it’s around 5.5% https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html https://www.cmegroup.com/markets/interest-rates/cme-fedwatch...
- silisili 4y agoSerious question. Do you feel then that all of these layoffs are a wink wink nudge nudge 'aye aye captain' gesture to fall in line with the Fed? Or do you(and they) think a recession is coming, and that in turn will drive rates down? It's hard to me to imagine it all, with inflation having been so bad the last two years. But I'm not versed enough I feel to propose any kind of argument either way.
- imtringued 4y agoYou can't sustain high government debt and high interest at the same time. "Federal government current expenditures: interest payments" are now at 0.9 trillion dollars annually. If inflation increases tax revenue fast enough then ok no big deal but that would still mean the interest rate has to be lower than inflation and if inflation has a downward trend then I would expect the interest rate to follow it with a huge lag.
- jarsin 4y agoI believe the layoffs were in response to the stock prices and the general market sentiment that the fed caused. The rates will come down at first because inflation has been beat. Then it will come down more when it becomes clear that the fed screwed up both ways and now has to try to fix the economy. Then the consumer will stop buying things because prices are going the other way fast. AKA a deflationary bust which can be much worse than anything we have seen in our lifetimes.
- drexlspivey 4y agoThis has to be a joke. If you truly believe that you can make a killing by betting on it.
- jarsin 4y agoNo, its not a joke. The fed can screw up and cause inflation but they can't screw up the other way and cause a deflationary death spiral? It will be the single biggest fight ever of every central bank to stop the death spiral that shows up on the back of their forced recession in the name of fighting inflation. They will go negative and QE much larger than pandemic.
- fijiaarone 4y agoIf you’re the type of guy that gets money from the fed, you’re still getting it at zero percent. If not, you won’t get it on the market for twice the official 4% interest rate either.
- JumpCrisscross 4y ago> you’re still getting it at zero percent What?
- qeternity 4y agoI don’t think you understand how this works. Nobody is taking money from the Fed right now, everyone is lending to the Fed. That’s why rates have gone up, the Fed is literally borrowing money.
- bink 4y agoThat sounds like a black swan. Rates that are historically unprecedented will soon become the norm. I can't say if you're wrong or not, but I don't think I'd gamble on it.
- jarsin 4y agoJeremy Siegel who has proven to call monetary policy correct and proved the fed wrong many times is calling what the fed is doing the 2nd worse mistake since great depression. If you think these morons can't cause a bust much worse than 2008 then pray to god Siegel is wrong for once. https://youtu.be/vNGdI4i9xok?t=581 https://youtu.be/vNGdI4i9xok?t=581
- lotsofpulp 4y agoHow are they unprecedented? https://fred.stlouisfed.org/series/fedfunds https://fred.stlouisfed.org/series/fedfunds The latter half of the 90s was >5%.
- Izkata 4y agoLow, not high. They're talking about 0 and <0.
- weatherlite 4y agoAnd simply live with high inflation? Sound great, I'm sure the poor will have a great time.
- bolanyo 4y agoThe poor are not necessarily the most affected by inflation, and can be among the least affected. Being poor means having around no dollar-denominated wealth, and usually less than zero.
- weatherlite 4y agoRent, food and energy gets more expensive with higher inflation. That's not a picnic for poor people with low incomes. The rich are affected as well but not in any way that actually hurts their lifestyle. Instead of having X million dollars they will have 0.8X million dollars.
- deleted 4y ago[deleted]
- bolanyo 4y agoWages also go up with higher inflation.
- weatherlite 4y agoNot as fast. Also unemployment goes up, and if we're talking about the poor (which I am) there's a lot of unemployment.
- bolanyo 4y agoI think both those claims are significantly at odds with the overwhelming consensus of both mainstream and heterodox economic thought.
- 4y ago
- spaceman_2020 4y agoI truly believe this. I do not think the people in charge have the guts to blitz through a forced recession.
- hammock 4y agoWell he might be right however I believe we have to start a recession first before they fully pivot and start cutting