Alright here is the argument against me--
And while the Fed does have a third "shadow mandate" of financial stability — its formal goals are stable prices, or 2% inflation, and maximum employment — there has not yet been an S&P 500 target added to the Federal Reserve's Congressional mandate.
Still, these tighter financial conditions Fed officials are angling towards do carry some potentially significant positive impacts in the Fed's inflation fight. A stronger dollar increases purchasing power for U.S. consumers, brings down global commodity prices, and in turn helps ease input prices. All of which is disinflationary, just what the Fed would like.
As Fed Vice Chair Lael Brainard
said in a speech on Wednesday, profit margins in several industries remain elevated after last year's boom and firms appear willing to accept lower margins as consumers respond negatively to higher prices.
And as an added bonus, the soaring greenback also puts pressure on cryptocurrencies — that
perennial thorn in the side of U.S. regulators.
The Fed is also expressly content to see lower stock prices dampen the "wealth effect" of the nation's most affluent and their attendant spending. Inasmuch as this "trickles down" to the working class, the Fed is willing to tolerate some increased misery
ifits broad strokes manage to stuff the inflation genie back in the bottle.
And it all makes sense. Except this dampening of wealth effect into a political season<--that is wrong. The Fed does not want to cool the economy off that way because it will plunge us into recession.
I think these Currency spreads are wide enough we could have a incident-- a canary in the coal mine sort of event. Act now and control this runaway dollar.
I believe a surprise move of .50 would do that.