What Will The Fed Do?
All eyes are on the Fed for some reason. I get it, most people do buy into Dont Fight The Fed. Personally, it is evident they are the ultimate contrarian indicator. Whatever they attempt to do, the opposite usually happens.
In this video I discuss how a major pullback in equities and real estate will not sit well with them. What is Powell and company going to do with a 20%-30% drawdown in both?
▶️ 3Speak
0
0
0.000
Holy shit somebody's auto-vote must be asleep haha! 3 hours and this isn't even past $15
I don't think they really care about a draw down that much. From what I see, the hedge funds and big guys have been selling their own stock for quite a while and I think most of them have built themselves a buffer. So I think the 20%-30% drawdown will hit the normal average person the most.
Posted Using LeoFinance Beta
You are right. I think there are many market "insiders" who are not certain about things going forward (maybe they know something).
However, the Fed cannot take the publicity hit. In my view, they are trying to keep things together from a market/Congress/general investing public standpoint.
Market crashes do not bode well for them.
Posted Using LeoFinance Beta
Summary:
In this macro moment episode, the speaker discusses his views on the Federal Reserve's role in the economy. He expresses skepticism towards the Fed's ability to manage economic conditions effectively, particularly concerning predictions of rate increases, housing market drops, and stock market fluctuations. The speaker anticipates a potential shift in interest rates by mid-year and suggests that the Fed may need to quickly adjust its strategies to avoid being blamed for economic downturns. He references historical instances where the Fed has had to reverse its policies and emphasizes the importance of staying nimble in responding to market changes.
Detailed Article:
The episode opens with the speaker, Taskmaster4450, delving into the topic of the Federal Reserve and its influence on the economy. He starts by expressing his contrarian view towards the commonly held belief of "Don't Fight the Fed," stating his belief that the Fed is given more credit than it deserves. Despite this, he acknowledges the Fed's capacity to influence markets through managing expectations, even if he has reservations about their effectiveness.
Taskmaster4450 dismisses the idea of three rate increases in a year as absurd, suggesting that only one rate increase may materialize. He confidently asserts that the Fed would not allow a significant drop in housing prices or the stock market, indicating a belief in the Fed's intervention when economic conditions deteriorate. While he doubts the Fed's ability to curb inflation entirely, he predicts a potential decline in inflation later in the year if supply chain issues ease.
Discussing the housing market, Taskmaster4450 notes a peak in housing prices earlier in the year, highlighting a gradual downward trend since then. He explains that housing markets typically exhibit a topping pattern before declining, emphasizing the complexities of real estate trends.
Regarding the future, the speaker speculates on the possibility of major market drops by the end of the year, particularly if demographic shifts and work-from-home arrangements persist. He foresees interest rates decreasing by mid-year, especially in longer-term rates, cautioning that the bond market may not react positively to the Fed's actions in the long term.
Taskmaster4450 concludes by referencing past instances where the Fed had to quickly reverse policies due to market pressures, hinting at a potential repetition of such events in the current economic landscape. He warns of the Fed being perceived as too slow to respond and potentially needing to course-correct swiftly to avoid blame for economic challenges.
In his final remarks, Taskmaster4450 reflects on the Fed's agility in adjusting policies, likening the current situation to a repeat of events in 2018 when the Fed had misjudged market conditions. He signs off by encouraging listeners to have a great day and hints at future content on the subject.