‘End Of An Era’: Sea Change Seen In Abruptly Hawkish Fed
Risk sentiment took a hit Thursday, as global equities responded to a Fed which, by appearances anyway, abandoned any pretense to "patience" during December's deliberations.
It's probably apt to describe the minutes of 2021's final policy meeting as "overtly" hawkish. On Wednesday, I said they merely "skewed" in that direction. I try to adopt a measured cadence when possible, but there was no mistaking the sense of urgency. I still wouldn't call it panic. But, as one headline put it, the Fed "l
Good news for Erdogan.
Good news for savers.
Good news for writers – another author I follow penned something entitled “Santa Claus has left the building”. Opportunities abound in these tricky times.
So far…..all talk and no action. Based on how the Fed has responded to the slightest economic hiccup over the last 10 years- it is reasonable to think that everything being discussed that is “hawkish” will be delayed or toned down.
We are still in a longer cycle of deflation.
If I could just figure out not only when to get out but when to get back in….. but alas. my past experience proves that at best- I get only one of those two calls correct.
3 hikes at this point sounds aspirational to me. so is shrinking the balance sheet. i cannot understand the obsession with that. my own suspicion is that things are going to look quite a bit different come march.
“In other words: Where is the Powell put struck these days? If inflation continues to be viewed by The White House as a larger political liability than a prospective stock market swoon, the answer is probably “lower than it was in 2018.””
There it is in a nutshell. Brilliant.
Concurrent monetary and fiscal tightening. What could go wrong?
I agree and will add that inflation is a more potent liability to The White House (in an election year) than stock market losses. Not only does inflation affect many more of the voters who don’t own stocks, it affects them much more than those who do own stocks.
Fed message to markets … Continue with irrational exuberance at your own risk…
… the game of chicken continues…
Politics and economics make strange bedfellows. There is something to the notion that at the end of the day the Fed is not immune to the politics of the day which clearly point the finger of blame on inflation at the Biden administration, which is not completely fair. If Summers is right, that suggests that the March 21 bill is partly to blame and maybe some of the supply side issues stick to Biden but largely they are not of his making. Nevertheless, it does feel as if the politics of the moment are not irrelevant in understanding this latest Powell Pivot.