Anyone else STRONGLY disagree with what the Fed is doing?

[TheDawn]

Anyone else STRONGLY disagree with what the Fed is doing?

-Yes Cathie Wood!! She thinks all her fund's troubles were all caused by the Fed raising interest rates.

 

[Nobert]

If they wanted the people to benefit & not the market, they would have raised rates by 2020.
But those longs had to recover, so.

 

[SunTrader]

They didn't stop hiking rates to Bolivia...

Hiking rates <> buying bonds.

 

[longandshort]

I like your a,nalysis. I have a slightly different take though. I see fiscal policy fighting Fed monetary policy. Because of that, it seems likely a funds rates above 5% will ultimately be needed to bring inflation below 5% and I fully expect the Fed to go on until they induce a recession and unemployment. I don't see a return to the old 2% target, barring a deep recession. It will have to remain higher than 2% for long time.

There are alternatives that should be attempted, but it would take forward thinking and action from the administration and Congress. The Fed is doing what they know how to do.

Then you think Fed funds futures are a short (you think yield needs to go higher), and would sell US2Yr bonds. The impact of that to long-duration assets would keep you short or underweight.

 

[SoyUnGanador]

Hiking rates <> buying bonds.

Yes, not equal. They can stop buying bonds and still be hiking rates into Bolivia, which is exactly what they are doing. After me responding to you like 37 times my original point still stands. But happy to keep responding to things you point out that I already know and that don't dispute my original point LOL.

 

[SunTrader]

Yes, not equal. They can stop buying bonds and still be hiking rates into Bolivia, which is exactly what they are doing. After me responding to you like 37 times my original point still stands. But happy to keep responding to things you point out that I already know and that don't dispute my original point LOL.

Fine just so you finally understand, unlike what you previously said, The FED is no longer buying bonds.

 

[SoyUnGanador]

Fine just so you finally understand, unlike what you previously said, The FED is no longer buying bonds.

Where did I say that they were continuing to buy bonds LOL?

 

[SunTrader]

Where did I say that they were continuing to buy bonds LOL?

"But the Fed BUYING those bonds by printing money is what is behind all this inflation. As you said, they just need to quit purchasing, and let them expire."

 

[SoyUnGanador]

"But the Fed BUYING those bonds by printing money is what is behind all this inflation. As you said, they just need to quit purchasing, and let them expire."

LOL, I see the confusion. I should have said "needed" not "need". My point was all they needed to do was stop the bond buying, not (also) hiking rates to Bolivia. Sorry for confusion.

 

[Wide Tailz]

Inflation comes in two forms - "cost push" and "demand pull".

The first type is when scarcity causes costs to go up, due to shortages (bad crops, less oil coming out of the ground, loss of productivity from brain drain, boomers retiring). This was the main cause of the 70s inflation and it started with the oil embargo and energy price shocks.

The second type is when there is a lot more money bidding on the same items. Fastest way to get here is to print money to pay bribes, because they tend to get spent quickly.

We've had both.

Fed is targeting the cause of the second type by trying to decrease the money supply but the Chinese, Saudis and Russians have been subsidizing the cause of the first type for decades, and now that is coming to an end. Nothing the fed can do about that.