Fed Day

cawacko

cawacko

Well-known member
I know we have a number of folks here who follow the stock market. Thoughts on what Powell does today? 25bps increase?
 
Nordberg said:
Who knows? It might be nothing. A quarter-point will not do much.
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25bps isn't a large number but it's not insignificant. It's also about what it signals to the market and are they buckling under pressure if they don't raise rates?

I do not pretend to be an expert on this but I know they are both trying to fight inflation and at the same time handle the banking crisis and there are dueling arguments over what a rate increase would mean for banks.
 
cawacko said:
I know we have a number of folks here who follow the stock market. Thoughts on what Powell does today? 25bps increase?
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Quarter point or nothing. The quarter point is already baked in to the markets, so if there is no rate hike the markets will go up this afternoon. Otherwise they will remain stagnant.
 
25 bps increase it is and what I've read so far looks like they are expecting higher rates going forward but that it's an open ended commitment. The markets will probably like that.
 
And of course Fed insiders already know this before the rest of us, and can invest accordingly. A rigged system.
 
Bigdog said:
And of course Fed insiders already know this before the rest of us, and can invest accordingly. A rigged system.
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This 25bps increase wasn't a surprise. Based on previous forward guidance this was not unexpected and was already priced into the market. There was talk of course after the banks collapsed that they may not go forward with the increase but obviously they did.
 
cawacko said:
This 25bps increase wasn't a surprise. Based on previous forward guidance this was not unexpected and was already priced into the market. There was talk of course after the banks collapsed that they may not go forward with the increase but obviously they did.
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Yes, that's what happened this time. Apparently, banks like SVB were surprised by previous Fed moves and invested poorly.

The Fed is very secretive and speaks in riddles. There is no good reason for such obfuscation except deception.
 
Nordberg said:
Who knows? It might be nothing. A quarter-point will not do much.
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It will uphold the political narrative. It would be a mistake to make it nothing or less than .5. Inflation is well over wage increases and real Americans are losing in this equation. You know, those ones that the pResident used to pretend to care about before he set the new IRS agents out to "get" those "evil and rich" waiters and waitresses (not to mention the waitpersons, waitanimals, waitsloths, waitcats waitdogs and don't forget the waitpluses). Those tips are going to make the DIFFERENCE! That will close OUT the deficit and make the Koch brothers pay their "fair share" (if they happen to get tipped for their service at some point, that is).

Remember when he insisted that nobody who earned less than $400,000 per year would pay one single dime more in taxes? Yeah... Pepperidge Farm remembers.
 
Bigdog said:
Yes, that's what happened this time. Apparently, banks like SVB were surprised by previous Fed moves and invested poorly.

The Fed is very secretive and speaks in riddles. There is no good reason for such obfuscation except deception.
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The Fed has been using forward guidance since 2003 I believe so this isn't new. Forward guidance isn't set in stone of course because circumstances do change but the whole purpose of it, in theory, is that markets aren't spooked. It's why we always hear "markets have priced in a 50bps increase" for example prior to the Fed meeting.

The Fed fvcked up by calling inflation transitory and keeping rates too low for too long. They then had to pivot and raise rates rather quickly as a result and SVB wasn't prepared for that with how they invested and handled their balance sheet. I don't see that as anything rigged, rather just piss poor performance.
 
Bigdog said:
How are people like Paul Pelosi 100% correct on their stock investments?
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You're arguing insider trading there. Investors don't go to people on the FOMC and try to get to find what out what they plan to do with rates to pick individual stocks.
 
cawacko said:
The Fed has been using forward guidance since 2003 I believe so this isn't new. Forward guidance isn't set in stone of course because circumstances do change but the whole purpose of it, in theory, is that markets aren't spooked. It's why we always hear "markets have priced in a 50bps increase" for example prior to the Fed meeting.

The Fed fvcked up by calling inflation transitory and keeping rates too low for too long. They then had to pivot and raise rates rather quickly as a result and SVB wasn't prepared for that with how they invested and handled their balance sheet. I don't see that as anything rigged, rather just piss poor performance.
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Calling it "transitory" was leftist politicization. Just as propping up Obama's economy with 4 QEs was leftist politicization.

Call it a lie or an innocent gaffe if you prefer. But I remain wholly suspicious of an organization whose policy is to create constant and continuous 2% inflation, and is now set to collect 1/2 trillion dollars in interest from the taxpayer every year. And it has failed to end the cycle of economic booms and busts, it was tasked to stop.
 
Bigdog said:
Calling it "transitory" was leftist politicization. Just as propping up Obama's economy with 4 QEs was leftist politicization.

Call it a lie or an innocent gaffe if you prefer. But I remain wholly suspicious of an organization whose policy is to create constant and continuous 2% inflation, and is now set to collect 1/2 trillion dollars in interest from the taxpayer every year. And it has failed to end the cycle of economic booms and busts, it was tasked to stop.
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You will get no argument from me about criticisms of the Fed. Danielle DiMartino Booth is a former Fed insider and wrote a great book called Fed Up and speaks to a lot of their issues.

From a political perspective everyone seems to love easy money. Trump during his Presidency was jawboning Powell to lower rates even while claiming we had the greatest economy of all time.

I'm willing to bet if they did one of those interview on the streets type deal most people would have no idea who the Fed is or what they do. They couldn't tell you who Jerome Powell is nor have a clue about how much control Fed policies have over the economy and stock market. Part of that is understandable because we don't vote for these people and it's not something most of us deal with only a daily basis. Very little water cooler talk or dinner party chats revolve around interest rates and the Fed's next move. But it's still a big role in our economy.
 
cawacko said:
You will get no argument from me about criticisms of the Fed. Danielle DiMartino Booth is a former Fed insider and wrote a great book called Fed Up and speaks to a lot of their issues.

From a political perspective everyone seems to love easy money. Trump during his Presidency was jawboning Powell to lower rates even while claiming we had the greatest economy of all time.

I'm willing to bet if they did one of those interview on the streets type deal most people would have no idea who the Fed is or what they do. They couldn't tell you who Jerome Powell is nor have a clue about how much control Fed policies have over the economy and stock market. Part of that is understandable because we don't vote for these people and it's not something most of us deal with only a daily basis. Very little water cooler talk or dinner party chats revolve around interest rates and the Fed's next move. But it's still a big role in our economy.
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Agreed. Yes, no chats around the water cooler because only FED INSIDERS really know what the Fed will do.

IMO, to believe that the Fed is sacrosanct, absent of any cronyism or nepotism is naïve. Yes, they announce their plans. But people who know what the 'announcement' will be, make their stock plays before the plans are announced. That's all I'm saying.


Yeah, Trump was pissed. He wanted the same "playing field" as the Feds gave Obama for 8 years. The Fed was trying to make Trump look bad. IIRC, they only raised rates in Obama's last months just before Trump became president.
 
Bigdog said:
Agreed. Yes, no chats around the water cooler because only FED INSIDERS really know what the Fed will do.

IMO, to believe that the Fed is sacrosanct, absent of any cronyism or nepotism is naïve. Yes, they announce their plans. But people who know what the 'announcement' will be, make their stock plays before the plans are announced. That's all I'm saying.


Yeah, Trump was pissed. He wanted the same "playing field" as the Feds gave Obama for 8 years. The Fed was trying to make Trump look bad. IIRC, they only raised rates in Obama's last months just before Trump became president.
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With forward guidance we all have an idea of what the Fed will do next so that shouldn't stop people from having conversations if they so desire (even if they didn't offer forward guidance people could still speculate as to their next actions).

As far as voting members of FOMC, or other Fed insiders, doing inside trading I can't really speak to that. I'd think there would be pretty strong restrictions against it and hard to get away with it but I can't say one way or the other.

A lot of people don't believe the Fed should have moved forward with QE 2 and QE 3 (under Obama). The argument for why they did was the poor performance of the economy. So my issue with the idea of a level playing field is 1) it's bad policy - the Fed should not have kept rates as low as they did for as long as they did and 2) it's contradictory to claim we have a great economy while stating we should lower rates - if an economy can't sustain itself without additional monetary steroids from the Fed, is it really in all that great of condition?
 
floridafan said:
Just like the Republicans in Congress who just happen to have inside information and act on it accordingly.
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Are you saying that democrats are all saints? That dems would never ever use inside info for personal profit?
 
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