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It isn’t irrational if the concerns you’ve mentioned makes the market think the fed will have to drop interest rates again sooner rather than later. At this po
by voisin 3y ago
It isn’t irrational if the concerns you’ve mentioned makes the market think the fed will have to drop interest rates again sooner rather than later.
At this point the market is essentially a drug addict that just got a shot of Narcan and rather than atone for its sins, has gotten excited that it’s going to live long enough to get at least one more hit.
There’s no discipline, no long term, fundamental thinking. Everyone is (and has been for a few decades) just another ape from r/WallStreetBets, even if he or she is wearing a suit and goes to work in a fancy office tower.
- scottLobster 3y agoOh yeah, but the market's been predicting the fed will be "forced" to drop interest rates for about a year now, base solely on the taper tantrum from several years ago. Hasn't happened yet. What the market seems to be conveniently ignoring is that a world where the Fed allows itself to be "forced" into lowering rates to near-zero again is a world where the Fed largely ceases to be relevant. So the Fed is, IMO, going to keep rates at least where they are if not higher if for no other reason than self-preservation. They'll have to see complete market capitulation before they'll consider lowering again. Besides, one of their mandates is price stability. If they lower rates again, guess what happens? More inflation, and then they have to raise rates again because Congress certainly isn't capable of doing anything about it.