Posted on 03/27/2023 3:05:20 AM PDT by EBH
The Federal Reserve's year-long effort to fight inflation through aggressive rate hikes appears to be near its end, and that sets up a new landscape for investors, according to DataTrek Research.
"Markets expect the Fed to cut rates later this year, and even the [Federal Open Market Committee] believes we are near the end of the current rate cycle," DataTrek's co-founder Nicholas Colas wrote in a note Friday. "We are entering a 'Post-Fed' world, where monetary policy decisions will be less important to market psychology."
DataTrek noted that as the Fed slowed its hiking pace late last year and early this year, S&P 500 volatility declined. And now amid worries about the global banking system, investors are betting on a pause in rate hikes in May that could lead to rate cuts as early as June, according to the CME FedWatch tool.
Rate cuts can provide upside support for stocks. But the concept in behavioral economics called Prospect Theory "reminds us that investors overweight the fear of loss," said Colas. "Having been hurt by last year's market action, they will likely remain skittish even as we move into a new investment paradigm."
In a post-Fed world, Colas suggested four factors could shape the investment landscape:
(Excerpt) Read more at msn.com ...
""Whatever Treasury Secretary Yellen and Fed Chair Powell are doing publicly and privately to help stem market concerns is very clearly not working," said Colas. "
So if I am reading this information correctly, they are saying the markets are already pricing in the demise of the Fed? The markets recognize whatever the Fed and Treasury are doing doesn't work and the market doesn't care? The market is going to make them irrelevant going forward.
Almost looks like a rejection of policy to me. Not denial, out right rejection of the agenda of the deep state?
Many have been preparing for a hyperinflationary cycle, new currency FedNow, and hard times. Some are saying zombie apocolypse, socialism like China, Great Depression 2.0, others are preparing to take advantage of the fall. Talking about how millionaires are made in times like this when there is a big shift.
But to read that the markets have basically said to hell with the Fed and Treasury is something I do not think has been calculated into the general population's psyche.
The number of dollars in the economy is a market fundamental. Unless you take that control away from the Fed, it will always remain a force to be reckoned with.
Well that is sort of the point of my post and questioning it.
The market is thinking outside the box, but where is it going?
FedNow hits in July. Is it going there or are they thinking it will collapse on its own petard.
The money supply is just fiat dollars.
Good Faith & Credit and all that rubbish.
The markets are basically saying there is no good faith & credit anymore. It is drying up as the banking emperors have no clothes.
Tangible assets.
>> I don’t really understand how the entity that controls the money supply could ever be considered irrelevant.
I don’t really understand how the untruth of multiple fluid genders took root... or how the untruth of anti-racisim (i.e. anti-white racism) could get established as the de facto law of the developed world... or how the fantasy of “green energy” that weakens and impoverishes nations in the name of “saving the erf” could pass the smell test among supposedly sane people... or...
Well, you get the picture. We are not just living in a post-Fed era, we’re living in a post-TRUTH era.
Exciting times huh.
The Fed can only partially control the amount of money in circulation, since it is also involved in financing government spending, which is controlled by Congress.
It’s traditional tool of controlling interest rates is becoming ineffective. There is now so much debt in existence that it cannot increase interest rates very much since doing so causes the creditors losses on their loans and debtors are unable to pay for debt rolled over at higher interest rates.
“I don’t really understand how the untruth of multiple fluid genders took root... or how the untruth of anti-racisim (i.e. anti-white racism) could get established as the de facto law of the developed world... or how the fantasy of “green energy” ...”
It’s a national media thing. The national media picks topics that titillate its national audience.
You are correct. There is no place left to kick the rusty can, the question is where are the markets going in the post-fed world?
We know BRICS are moving to gold.
And we are moving to digital?
Seems to me there is a huge disconnect, especially since the culture and intelligence levels of the western world are in decline. We cannot rely on American innovation to lead the world.
They can loan our five dollars for every dollar they have on deposit.
Even if they charged the same interest rate that they paid, they would be getting income on four of the five dollars. They reality is that they charge at least double for the interest rates on their loans that they pay out on their deposits. So they are generating income on 4.5 dollars for every dollar on deposit.
The loan default rate is less than 2%. It might double or even triple when the economy goes south, but this is a short term risk which can be managed by tightening credit, which banks are always quick to do, at least if they are reasonably managed.
Nobody much wants to borrow money with the FED jacking up interest rates, so that is obviously hurting the ability of banks to loan plus the risk of default is increasing. Still, there are loans they can do at near zero risk of default such as one I have that is costing me 2% more than I am earning on an IRA CD. But it makes sense to pay the 2% to the bank versus 15% in additional taxes since I am nearing retirement.
So we’re heading for hyperinflation, and the Fed is going to be part and parcel of this process because why would it stop now?
“The national media picks topics that titillate its national audience.”
More like:
The national media is fed topics, and what to think and say about them, by the deep state.
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