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Originally Posted by ASAP
Market trends and reactions are basically a load of horse... you know that. 50 BPS were always priced in... nothing more.
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A lot of people much, much smarter about this stuff than both of us disagree. Up 'til Friday the odds of a 0.75% increase were about 25%. By the close of the market on Friday they were 100%. And, do you really think Timiraos, the WSJ reporter who published that, would have risked his career by making it up?
Quote:
Originally Posted by ASAP
The sentiment now is that the FED is basically trying to destroy the economy... buddy let me tell you something... if 1.5 points over a few months destroys the economy... we have been skating on ice that wouldn't have been fit for ants.
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The Fed is required to control inflation to the extent they can; it's literally their charter. They can't just sit on their hands when inflation is busting through 8%. So, they must do something to destroy demand, and raising interest rates will do that. The current target rate, which is what is driving the market (remember, forward looking), is 3.8%, not 1.5%. That's expected to be reached next spring. Unfortunately for the Fed they waited too long and now they're raising into an economy that's slowing because of the price shock oil has delivered. That's why the concern about stagflation.