Here’s What Goldman Says Would Happen To Markets If The Fed Delivered A 150bp Rate ‘Shock’
It all depends on your definition of "shock", now doesn't it?
That's my takeaway from a new note out from Goldman that seeks to quantify the effects of a 150bp "unexpected increase" in the Fed funds rate on financial conditions and thereby on the economy.
This builds on a slew of notes the bank has released over the past year that delve into the interplay of Fed hikes, financial conditions and GDP growth.
The bank's Sunday analysis actually seeks to describe the entire loop between monetary p
Prognosticating about the impact of a 150 point flash rate increase by the afed is on a par with the DOD developing a war plan to combat a zombie apocalypse. Junior analysts and junior officers from third rate schools cutting and pasting slide decks to address scenarios best suited for video games.
I have to agree with Mr. Ponzi. Extremely unlikely that the FED would even contemplate a 150 bp “shock”. Zombi Apocalypse seems more likely. There are analysts out there who seem to get orgasmic gratification by imagining and writing about highly improbable very worse case scenarios. So be it.
Here’s a thought: What if a 150bp increase — or a 150bp x3 — helped to “kill” the Vampire Squid and, more generally, financialization of the U.S. economy, forcing those with money to lend to led it to activities that are actually productive in terms of growing an economy?