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Is The Selloff Finally Here?
It's clear enough that previously "oblivious" equities reached the limit this month in terms of how much rates re-pricing and geopolitical tension stocks can absorb with alacrity.
The S&P came into Friday on track for its worst showing since Jerome Powell conceded, on October 19, that the US economy's demonstrable resilience suggested Fed policy settings weren't especially onerous ("not too tight," as he put it). Critics spent the next four months asking what happened to that Jay Powell.
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1929, 1974, 2000, 1987 (briefly). Those were selloffs.
Why do we think the Fed’s thoughts are worth listening to? They can’t raise rates. It would be crazy. It would kill housing and commecial real estate. the 70% of citizens with negative cash balances would never vote for Biden this fall! They can’t cut them as it goes against two years of Fed BS, and equities would go to new highs. THE FED NEEDS A CRASH. If the market did a 1987 or even a miserble 2008 or had a new COVID-like collapse, then they would have a job. Let this economy run, and quit wiggling your lips. With some astion, we could actually stay awake when Powell is hemming and hawing and even boring the Canadians at the IMF.
P.S. maybe it’s the investors’ fault. We do have some economic problems to solve. Don’t we?
Agreed. Even if inflation persists, they can’t raise rates this year (saying anything about election & monetary policy:strictly verboten). Also, as an excellent article earlier this week reminded us, higher interest rate helps the wealthy that earn interest.