Pre-FOMC meeting today, the market has priced in over four rate cuts next year, Do you believe that?
Hopium Priced In
One hell of a lot of hopium is priced in. I expect the Fed to dash some of this hopium later today, so do others I follow.
Powell a Hero?
Powell will not be a hero no matter what he does. The Powell Fed blew it, like the Yellen Fed, and the Bernanke Fed, and the Greenspan Fed.
Is It Possible Rates Dive to 4.25 Percent?
Of course it is. But that implies bank failures or big economic stress, neither of which would be good for the equity markets.
Hopium is misplaced. And I expect the Fed to dash a bit of it in a few hours. Place your bets.
There is currently no free market in ‘what is money’ and ‘what should the inerest rate be.’ So, what is the point in discussing it?
It will take much more inflation to maintain the bloaters’ unearned ascendance thru the depression they have caused.
They must inflate more and faster than ever to hold off the depression it causes.
It should be 90% to more accurately reflect the actual values and risks of these ‘investments’.
5.5%
Inflation accelerates slowly through August ’24, forcing the Fed to raise rates to 6% by June.
IF the labor market turns negative in the late 3rd quarter of ’24, then I’d see 2-3 rates cuts by this time next year.
Wolf must be having a meltdown. After his “hot inflation” post of yesterday, there’s complete silence.
Core inflation is still rising. The ONLY reason headline CPI is falling is because of oil, which falls this time of year anyway, and spring is only about 3 months away.
If the labor market remains buoyant, then core PCE inflation is forming a trough. As expected, the Fed is taking things month by month.
But don’t be surprised if the labor market holds up. As long as it holds up, the chances of cuts go down dramatically.
Again, a ’74-’76 head fake is a REAL possibility and Wolf knows this, and the thing about Wolf is that he doesn’t make predictions.
5%, or…
My vote is that they should be placed in a conservatorship. .
WOW!! Statement was way more dovish than anticipated. Three cuts promised next year! Look for new all-time highs on every index soon.
I hope they keep them right where they are. Sure my bends are taking a hit but we have cash also. I am sure the Wall Street crybaby’s will get their fix.
I suspect that interest rates will be lower a year from now but I have no idea, how much lower; the future is hard to predict.
For example, I recall Mish predicting a few years ago that the Fed would never be able to raise rates, or would have great difficulty raising them even a tiny amount.
Yet here we are. Eleven rate increases later, from 0.25 to 5.5 % in two years. And I think the Fed dot plots from a few years ago, that so many here ridiculed, were pretty close to being spot on.
Interesting analysis of financial assets in terms of energy and the impending energy cliff.
https://youtu.be/2HuPZWdePoA?si=cvoWV_9BZn2cVQEA
I do not see an energy “cliff” happening. Rather, I see a decade of modest upward pressure on oil prices due to demand continuing to grow faster than supply. Oil companies should be able to generate a lot of cash flow.
The push to BEVs is decelerating for sure. How long that lasts is hard to say. Personally, I think it lasts until solid state batteries go mainstream which is at least 3 years out and more likely 5 to be in widespread use. That’s good news for oil investors.
???
Scaled battery tech can’t happen – impossible. EVs will never reach a level of mass adoption.
There aren’t enough resources in the ground to approach any meaningful level of adoption/use of scaled battery tech, period. Cost of battery material resources will become prohibitive LONG BEFORE EV/battery tech has any measurable impact anywhere, much less “the mainstream”.
Tesla/EVs = glorified golf carts = toxic un-recycle-able waste akin to spent nuclear rods @ 1000x volumes
Yeah, Global South is going to weaponize oil & other commodities just as our dumb asses have weaponized the dollar.
Soon it might be a good time to get into domestic energy (XLE). Waiting for a pullback.
Damned if they do, and damned if they don’t … full speed ahead … the ship is still sinking …
Remember. The ship has to be moving for the rudder to have effect.
There used to be an expression, “Don’t fight the Fed.” All that gets you nowadays is broke. The stock market’s new mantra is to fight and doubt the Fed at every opportunity.
As Mish’s piece says, Powell tried to jawbone a higher-for-longer agenda in speeches last month, which the market immediately discounted and just kept ripping. If Powell had any real cojones, he’d hike a quarter point today to regain contol of the narrative and take some of the froth out of equities.
You got that right!
I agree it would be the right thing to do but I’d be shocked, shocked I tell you especially with the Biden admin on his a$$ to lower them
I place my bet with yours, higher interest rates are here to stay for the longterm. The daze of rates cuts are over, with over 7 trillion next year to monetize. Of course interest rates will zig and zag upward, but upward is the correct longterm path.
There could be a market crash or there could be inflationary spike. I’m guessing the Biden Administration will try to pump more money into the economy. It’s an election year! This implies more inflation. 2024 will be a very interesting year. The Ukraine project will likely collapse and Israel’s unrelenting massacre of kids could spark regional conflict. May you live in interesting times! FJB!
The Fed will be forced to pivot lower, because the Economy will finally be forced into being called a “Recession.” The economy is ALREADY shit.
HOW LOW: 25 to 50 basis points by Mar 2024. ZERO by 9 months later. NEGATIVE by 2026.
“What Will the Fed’s Interest Rate Be a Year From Now?”
I have no idea what that rate will be but, going by the financial madness that has reigned with increasing intensity since 2000, I am fairly confident it will be the worst possible figure for those that are not connected to Fed member banks or in the top 10% of the wealthiest Americans.
I am continuing to bet that the market will be incorrect and that interest rates will stay higher for longer.
The very best analysis that I have ever come across is coming out of Tom Luongo who puts out a podcast and a newsletter, Gold Goats and Guns. He is a slow meandering talker but his analysis goes in depth into aspects of Fed Policy that are hardly ever discussed by anyone else, but seem to me to be incisive and spot-on most of the time.
I listened to Tom and his guest this week…super interesting. Cannot recall his guest’s name but he is a regular.
I like Tom but to say he is a slow talker is to suggest it’s opposite day! More like he’s a fast talker, but takes a while to get to the point.
It is not ‘ don’t fight the Fed’ any more b/c Fed could change it’s policy next month or the next. What I learned since September is DON’T fight the Market. The power of perception is under appreciated. Now, Fed has conferred that ‘power’, next FOMO. mania after related selling! The most anomalous Bull mkt in history continues. I keep riding with some hedges.
Powell first started saying that he likes the path that inflation is on back in early summer, but with the caveat that the Fed will need to see more data before determining that they are at the mysterious “sufficiently restrictive” policy level. That was the last time that the Fed raised rates. Today, Powell again is likely to say that he likes what he sees with the disinflationary trends, but that the committee will need to see more data before thinking about easing rates. They will not likely even admit to thinking about easing rates until they are one meeting away from doing so. Thus, I would expect them to change language at the March meeting and cut at the May 1st meeting. I do not think that it is unreasonable to see them cut in May, June, July, November, and December. The July cut could end up being a 50 bp cut since that they will likely remain on the sidelines in September and October due to the election. Thus, up to 125 bp in rate cuts is not only possible but very plausible.
Why October?
The election will have been decided.
Duh.
JPO is going to do whatever he can to screw over FJB. FJB held up JPO’s nomination & humiliated him. JPO is gonna break FJB’s Balls.
A year from now (or a little after), after Biden is re-elected, the rates will head back down to zero. Biden will be cemented into history as a successful 2-term prez (goosed by all that wonderful interest paid to the old people who actually vote who made it happen), and we cant pay for interest on $32 trill in Federal debt with anything but zero percent.
WTF meds are you on? How can any sane person look at FJB with anything other than disdain?
How can any sane person look at FJB with anything other than disdain?
Agree 1000% When he offered to consider U.S. border security as an incentive for Congress to approve funding for Ukraine, FJB literally should have been tried for treason as far as I’m concerned.
The needs of the U.S.A. and stopping illegal, money sucking invaders should be Biden’s #1 priority, but he puts the Ukraine first and then maybe we’ll talk about border security and immigration reform.
Richard, the gas stations are all full of gasoline that costs the same (pump price) as we paid 11 years ago (negative inflation), the natgas for heating, electricity and fertilizer is cheap (so far), and the food stores are all full of food — albeit my sub sandwich that used to cost $6 is now $6.50. Heavens! Those illegal invaders are the ones that cut your meat, bus your tables, watch your children and cut your lawn.
You are being way too sober and rational. Sober and rational do not cut it on message boards. You are of course right that from a purely economic standpoint our economy is growing faster and has inflated less since the reopening of the economies around the world following the pandemic. When you are the largest economy in the world, you always need to be graded on a curve because your economy is inherently driven by international trade. Regarding illegal immigration, Biden has not been as proactive as he could have been in addressing the issue, he has also not closed the door on working with Congress to enact solutions, but he is unwilling to sensationalize the issue.
I don’t think the current batch of ‘migrants’ actually work. But they do get free housing, food, and money.
https://nypost.com/2023/11/10/metro/2-of-the-140k-migrants-who-came-to-nyc-have-applied-for-work-permits/
Yeah, and they will pay into the Medicare & SSA Ponzi too. They also will, more or less, integrate into our society unlike the Islamists that the Euro Trash have allowed in.
Yeah, I figured this wouldn’t be a popular view, but who’s going to make up for the Demographic Bust & fund the goddamn SSA & Medicare Schemes???
Ideally, we would incentivize Americans to have more children and not be forced to allow foreign born immigrants to come into our Country: especially, illegal ones.
Im not distaining, babe. Biden on a bad day is better than Mussolini.
Mussolini wasn’t so bad compared to Franco.
How’s the weather there in lala land?
40 degrees and sunny. Could be better, could be worse.