Powell: Rates Will Rise Until Job Is Done

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Bought a bunch of SNAXX today. 2.34% at the moment. I expect that to rise in late September. They should last us for a while. :popcorn:
 
Powell tried to beat around the bush the last couple times and ended up stoking a market rally. He finally realized that so this time he finally just laid it out there. There needs to be a recession to curb the inflation and the longer this drags out more pain it is for everyone.
 
I think Chairman Powell had no real option but to say what he said - pain ahead, Fed resolve - and anything else would have caused an extreme overreaction. Today, the future is just as promising, or grim, as it was yesterday.

We have learned time and again that daily movements in asset prices can be explained by media headlines but there’s no real correlation between news and longer term asset prices. Even with todays decline the equity markets have risen more than 10% over their mid-June low.
 
If this debt/spending continues at the whim of the gummit via executive order or if fraud supplants intended better causes for funds yet to be spent, I am afraid the FED many never catch up. They are already about 9 months or more behind the problem in my opinion.
 
Just another example of supposedly the market pricing in news ahead of time, but nobody really knows nuthin.
 
Per the usual the Fed will overcorrect on the upside and then panic & frantically cut rates but only after they've caused another deep recession...hopefully not a repeat of 2008-9.
 
ncbill said:
Per the usual the Fed will overcorrect on the upside and then panic & frantically cut rates but only after they've caused another deep recession...hopefully not a repeat of 2008-9.
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As someone famously said: "They know nothing!". OTOH, I'd be a lot richer than I am now had I been more aware and savvy in '08/'09 than I am now. All I did back then was just ride it out; I should've been buying low!
 
aja8888 said:
Just remember, nothing goes to heck in a straight line. This is the third bear market rally this year and it's turning south! Good luck! ;)
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Well all I can say is I caught the bottom of the market (for today anyway ;).... Bought at ~2:55 cdt.
 
Members of the Fed are 50-50 on .50% and .75% interest rate hike. Yeah sure, Powell will keep saying they will fight inflation, but it could either be a .50% hike or .75% hike in September .. we don't know. My guess is, it will be 0.50% hike in September.
At some point, the narrative will change to global supply chain bottlenecks, or "it's a supply-side problem, and monetary tools will have certain limits."

The market has always know that the Feds will keep raising rates until the end of 2023, so this 1000 points drop looks like an over-reaction. The market will continue to be very volatile until end of they year, or early next year. But I don't think we will have a recession.
 
Recent poll on CNBC was ~30% 50 bps, ~58% 75 bps and ~12% 100 bps.... 70% of respondents think more than 50 bps.
 
pb4uski said:
Recent poll on CNBC was ~30% 50 bps, ~58% 75 bps and ~12% 100 bps.... 70% of respondents think more than 50 bps.
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Poll time? :) I'd do it myself, but I'm just to lazy today.
 
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Fed rides the painted pony.

What goes up must come down
Spinnin' wheel got to go 'round
Talkin' 'bout your troubles, it's a cryin' sin
Ride a painted pony, let the spinnin' wheel spin.
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Spinning Wheel
Blood, Sweat & Tears
 
Montecfo said:
I hope his words become true and they work to fight inflation. It SOUNDS like they are becoming less dovish, or at least want the market to think that.

Last I looked, prospects for next rate hike were balanced between 50 and 75 basis points.

No, I do not think investors fully "believe" the Fed, as evidenced by muted responses to their pronouncements in many cases.
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At least they are trying to do something unlike our government who is spending like a drunken sailor. Too much money chasing too few goods. It's not that hard to understand.
 
Prepare to see rates rise to well above 10% (if Powell is serious). That's what it will take to stop runaway wage-price spiral.

Saver's Revenge! ♡

I'm actually licking my chops; the return of 2-3% CPI, and great SPIA payouts for the over-70s.
 
Lawrence of Suburbia said:
Prepare to see rates rise to well above 10% (if Powell is serious). That's what it will take to stop runaway wage-price spiral.

Saver's Revenge! ♡

I'm actually licking my chops; the return of 2-3% CPI, and great SPIA payouts for the over-70s.
Click to expand...

The hawkish of Fed members already said 3.50% - 4:00% tops .. 10% is just a dream, but won't happen :)
 
Best Case: Inflation has peaked, strong dollar, QE contraction, and 4% Fed funds rate bring inflation down to <= 5% by year end, everyone gets a fat social security check in January and the economy stabilizes at low growth with inflation ticking down over the next 18 months. The veritable soft landing actually happens for the first time in human history.

Worst Case: Energy prices pivot as Europe freezes this winter, covid outbreak in China shuts down supply, and inflation takes off again while the global economy is cratering. Labor markets reverse and we have a real mess next year this time.

How this all impacts asset prices is a guess. Certainly did not see the bounce off the lows or today's drop coming. One theme I am currently pursuing is to buy some French assets (bought ORAN today). France produces 70% of its electricity from nuclear and the market is pretty regulated. Average consumer will see almost no impact to energy prices vs. consumers in the UK or Germany. If the consumer holds up French companies may perform relatively well vs. the rest of Europe.

Probably W2R has the best plan: keep a good attitude and LBYM. May I also suggest some French wine as well :) Older vintage while the Euro is weak, bad grapes this year due to drought.
 
DJRR said:
Best Case: Inflation has peaked, strong dollar, QE contraction, and 4% Fed funds rate bring inflation down to <= 5% by year end, everyone gets a fat social security check in January and the economy stabilizes at low growth with inflation ticking down over the next 18 months. The veritable soft landing actually happens for the first time in human history.

Worst Case: Energy prices pivot as Europe freezes this winter, covid outbreak in China shuts down supply, and inflation takes off again while the global economy is cratering. Labor markets reverse and we have a real mess next year this time.

How this all impacts asset prices is a guess. Certainly did not see the bounce off the lows or today's drop coming. One theme I am currently pursuing is to buy some French assets (bought ORAN today). France produces 70% of its electricity from nuclear and the market is pretty regulated. Average consumer will see almost no impact to energy prices vs. consumers in the UK or Germany. If the consumer holds up French companies may perform relatively well vs. the rest of Europe.

Probably W2R has the best plan: keep a good attitude and LBYM. May I also suggest some French wine as well :) Older vintage while the Euro is weak, bad grapes this year due to drought.
Click to expand...


QE was stopped months ago, it's QT they need to move on.
 
cyber888 said:
The hawkish of Fed members already said 3.50% - 4:00% tops .. 10% is just a dream, but won't happen :)
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And last year they thought it was transitory and increases weren't required.

I think there is no way this stops at 4% interest rates. They just don't want to admit it.

Of course, I want rates to go up, so I have confirmation bias!
 
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