I just read in Bloomberg that investors don’t seem bothered about the Fed. They don’t believe that the Fed has the “spine” to keep tightening until inflation drops to its target, around 2%. Maybe they’re right, maybe Mr. Powell will revert to last year’s stance of thinking that inflation is “temporary”. But, having made that mistake last year it seems highly unlikely to me that he will repeat it.
One of the oldest dictums in Wall Street is “don’t fight the Fed”, ie don’t bet against its ability to set monetary policy goals and to achieve them. I think lots, maybe most, investors have been lulled into complacency after decades of a docile, nearly somnolent Fed.
But make no mistake: the Fed is the biggest dragon of them all and once it awakes….
ok man... I will go on the record and say that I think the Fed is spineless.... makes it more fun too eh... if we just sit around agreeing with each other,... it would be so damn boring... =)
ReplyDeleteMy model: The Fed only pretends to be worried about inflation... but actually they want inflation... its the only way the U.S. can solve the debt crisis... there may be some temporary hikes, QTs... but they are only temporary...
as Hell always says... watch what they do... not what they say...
DeleteSo far the Fed has moved slowly, for sure. But, it HAS moved and it is scheduled to move faster, with QT doubling from the end of this month. I really think Powell cannot afford to screw the pooch this time, and he knows it.
Deletefun times... =)
ReplyDelete