Sincere And Prudent

Sincere And Prudent

Equities will have their say on March's blockbuster US jobs report -- on a delay. The S&P breached 4,000 prior to Good Friday, and likely would have enjoyed another bump on the heels of a headline payrolls print that came in near the top-end of the range. That said, abbreviated action in rates found market participants once again looking to pull forward Fed hikes. In the past, that would risk triggering the "good news is bad news" dynamic, wherein blockbuster economic data dents risk asset
Subscribe or log in to read the rest of this content.

6 thoughts on “Sincere And Prudent

  1. The FED wants to stoke inflation not fight it, so why would the rates committee hurry to get in front of a spike in consumer prices? If market participants think we need to address inflation now, they need to speak to their local bond vigilante. In the meantime, rates are headed higher — and Powell is fine with that.

    1. Most every market participant of note on Wall Street only remembers the fighting inflation paradigm starting in the early 80s that has defined Fed behavior with regards to rates ever since. I think it’s hard for a lot of these participants to accept that Powell is actively changing that framework.

  2. As a novice market participant in the 70s I was taught to believe that the bond guys were way smarter than the stock guys. But a lot of this speculative angst about total protonic reversals and other inflation indicators is beginning to sound not unlike a reddit chatroom. Powell and the Fed are more Peter Venkman than Sta-puft marshmallow man.

  3. An investor could assume that the Fed is going to act exactly as it has stated with rate hikes at least three or four years away. With the pandemic and economic problems in Europe, Brazil, etc., a temporary spike in inflation/reflation could be followed by long-term low inflation rates; a strong dollar imports disinflation and higher treasury yields encourages a stronger dollar. In such an environment, growth (e.g. “FANG”) stocks and bond funds (at the yields peak) might do fairly well. But who knows? The relations between the US and China will affect everything.

  4. Silly me but I await M2V Q1/21. What has been going on has no precedent. Past correlations and conjectures are not applicable. The nature of, and real world workings of Fiat currency are still being realized. MMT is itself still a conjecture of and viable view of Fiat. As humans we always make it somehow work and the sky will always be falling.
    FRED Blog

    “Posted on August 21, 2014
    It is quite common to see arguments that if M2 velocity (the nominal GDP/M2 ratio) is low, it must be that inflation is high. While M2 velocity is currently at historical lows, inflation is clearly not high. Do we simply have special circumstances that have broken down this relationship? Is there such a relationship in the first place? ”

    How bad was inflation in 2014? We have no idea what inflation is. The Bond and Oil guys may be way ahead of themselves.

Leave a Reply to joesailboat Cancel reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

NEWSROOM crewneck & prints