The Fed and Economic Divergences

J

Joab

I just realized that the last time the Dollar was this low the Fed started hiking !!!

Add to this

Terrible GDP numbers
Terrible Housing numbers
Inverted Yield Curve
and
Luke Warm Employment numbers

All arguments that the economy is slowing so ... now we have divergence.

Weak Dollar
Slowing Economy
vs
Bull Market Euphoria


What do you think tomorrow's report will bring???
 
Sooner or later the smart thing to do is slow down or stop the asset price explosion.

DEBT levels are way to high...
 
add to that the fact that the fed usually lowers "AFTER" major recessionary periods are acknowledged and "AFTER" stocks pull back steeply from high points.

You have a pretty good likelihood that they aren't going to cut any time soon.

They may do nothing, so as not to startle the market. But it's doubtful, contrary to most of the cheerleaders, that they would start cutting IMHO.
 
What do you think tomorrow's report will bring???
More...

My take: no change.

If they can't pull it off by lowering the rate later in the year, then two things would happen:

1. Hyperpinflation
2. Stagflation
 
Great comments:

We still have not addressed the issue of the Divergence.

How do you see this melt up playing out ?

14,000 and burst or do we stall here ?

Tomorrows language will set the tone that's for certain.
 
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