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When Will The Fed Slow Down? (Not Now.) | Nick Timiraos & Joseph Wang
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Washington, D.C.

The Federal Reserve approved a fourth-straight rate hike of three-quarters of a percentage point on Wednesday as part of its aggressive battle to bring down the white-hot inflation that is plaguing the US economy.

The supersized hike brings the central bank’s benchmark lending rate to a new target range of 3.75% to 4%. That’s the highest the fed funds rate has been since January 2008.

Fed officials included a new section in their November statement — a rarity, since the Fed typically repeats the same language in each release. The Federal Open Market Committee, the central bank’s policymaking arm, “anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time.”

Fed watchers may interpret the addition of “over time” to their inflation rate target as dovish, meaning that the Fed may choose to ease away from aggressive rate hikes into smaller, but longer-term increases.

In addition, the statement noted that: “In determining the pace of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.”

This new language could also pave the way for an eventual easing in interest rates as it acknowledges that monetary policy may already be effectively cooling the economy even as economic data, which often operates on a lag, indicates strong growth.

Wall Street may also consider that language a response to a recent increase in criticism that the Fed is overcorrecting with aggressively high interest rate hikes that could damage the economy unnecessarily.
1) Try NOT to LOSE money!
2) Do NOT SELL in BEAR, BUY-BUY-BUY! invest in managements/companies that does the same!
3) CASH in hand is KING in BEAR! 
Tech workers brace for massive wintertime layoff surge

The bottom line: Tech is the most forward-looking of all industries, Axios' Felix Salmon notes. You don't hire for where you're at today — you hire for where you aspire to be tomorrow.

When tomorrow doesn't come, that means layoffs.
The recent US job reports proved otherwise. There are two sectors which contributed to the better than growth: (i) USA Manufacturing and (ii) Healthcare.

It is a good sign that the US economy is moving into manufacturing to reduce the dependency on China and reliance on Taiwan. So there might not be a wintertime of layoff- only at the Tech sector which is services related and burning massive cash. It is a sector which is wasting economic resources and ought to be trimmed down
Possibility of a Soft Landing
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December CPI came in at 6.5% vs my expectation of 5-5.9% by Dec22. The fluke Aug CPI disrupted the trend and the Fed had hiked more than I expected (fed funds rate to peak 4.5-5%)

Nonetheless it looks like the Fed rates will peak around 5-5.25%. That means Real interest rate will be about zero by April ie CPI to decline to 5% and real interest rate will be 1-2% by August ie CPI will go below 4% by Aug assuming Fed Fund rates maintain at 5-5.25% level

The key would then be if the Fed will cut rates in 3Q, faster than what they indicated and possibly in the face of recession. This is the roadmap I am seeing. Who will blink first?

(29-07-2022, 11:18 AM)specuvestor Wrote: Bearish if CPI is 5-6% end of the year. How full is your glass

Looks like it will be 50bp hike in Sept and 25bp in Nov vs my hope of 50 in July and 25 in Sep for soft landing scenario. Mild recession in 2Q or 3Q should be expected now rather than soft landing. CPI will be below 2% by then. Million dollar question is whether market forecasts this 12 months ahead with the 20-33% decline

(Bloomberg) -- Two bond market giants are diverging on whether the Federal Reserve is doing enough to tame inflation in the aftermath of the central bank’s interest-rate increase on Wednesday.
In one corner, there’s Scott Minerd, the chief investment officer of Guggenheim Partners, which oversees more than $325 billion. He said the Fed’s guidance that it will likely move more slowly through the rest of the year won’t help bring down price growth. He sees inflation ending at still-hot levels this year at between 5% and 6% -- well above the central bank’s target. 
DoubleLine Capital CIO Jeffrey Gundlach, by contrast, said this week’s unanimous decision to raise its benchmark lending rate by another 75 basis points means the Fed is no longer “behind the curve.”

(28-06-2022, 01:13 PM)specuvestor Wrote: ^^ I think it will trend towards 5% by year end but will it be 5.1% or 5.9% I'm not sure. I try to be roughly right than precisely wrong. Inflation is a lagging indicator: the conundrum of low inflation despite QE has come roaring back with Biden's fiscal package when supply chain was tight. this >8% has roots a year ago. PS on gold context do note that Bretton Wood ended in 1971.

I don't think we will go QT again within next 12 months but Burry's view is inline with what I'm thinking as well. If Fed is credible I suspect they should pause or reduce to 25bp hike by September. Powell doesn't have a good track record though

(27-06-2022, 04:12 PM)specuvestor Wrote: Market corrected sharply on 75bp hike and if July Fed hikes 50bp, market will already be relieved, but still an uphill as we stare at 2Q23 recession.

Freight rates and hard commodity are already coming off. Watch 29th June PCE and June CPI numbers that if it comes off the central thesis remains, except no idea whether Fed will gen-chiong even with CPI trending towards 5% by end of year.

(13-05-2022, 12:50 PM)specuvestor Wrote: US inflation is likely to peak YoY in 2Q22 because of the higher base in 2021 with Powell's famous Transient comment... Market is already looking to Fed hiking 50bp in June and July so recession coming in 2Q23. That's probably baked in by the markets. That's like 200bp hike within 6 months plus QT. Compare that with BoE 4 hikes that started in Dec21 with the FTSE relatively flat (excluding GBP depreciation) and we can see how Powell lost the script AGAIN

The concern is whether they will hike 50bp again in Sept or 75bp prior as Fed might be concerned of CPI sticky at 2-5% even as CPI likely to trend towards 5% by Dec 2022. If Fed hikes 25bp or stay in Sept and decided to wait and see I think markets will be relieved. But I'm concern about how clueless Powell can be.
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward

Think Asset-Business-Structure (ABS)
The dollar index declines from 115 to presently 102. Raw materials seems to be inching up as China opens up... Copper price for example is up around 30% from July 2022 low.

I have been watching the dollar index. USD has depreciated 8% in the past three months....meaning it costs 8% more to import... This will not help to beat inflation...

Interesting to watch dollar index and raw material price....
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