Posted on 06/15/2023 7:08:01 AM PDT by Kaiser8408a
61% of Bloomberg terminal respondents (including me, by the way) see Fed hikes leading to recession.
Bond traders are stepping up wagers that the Federal Reserve will steer the US economy into a recession.
Policy-sensitive front-end Treasuries led a selloff Thursday, while longer-date bonds lagged, a day after Fed officials indicated that they’re prepared to raise interest rates by another half-point this year following the first pause in the central bank’s 15-month hiking campaign. That sent the yield-curve inversion, as measured by the gap between two- and 10-year securities, to 95 basis points — a level last sustained in March — and approaching this cycle’s 109-basis-point extreme.
The price action suggests bond traders are skeptical that policymakers can avoid a so-called hard landing as they continue to press the case for higher borrowing costs in an effort to get a handle on inflation that remains more than double their 2% target
It’s not just bond traders who are growing concerned.
Sixty-one percent of respondents in a Bloomberg poll of terminal users conducted in the hours after the Federal Open Market Committee decision said tighter monetary policy will ultimately cause a recession at some point in the next year.
The Fed’s aggressive outlook for rate hikes through year-end may be an effort to dash bond-market expectations for cuts in the months ahead, according to Michael de Pass, global head of linear rates at Citadel Securities.
While The Fed paused at their recent FOMC meeting, they are expected to raise their target rate at the July meeting …. then stop. Despite being only a little over 50% of where they should be (10.12%) to cool inflation.
(Excerpt) Read more at confoundedinterest.net ...
Tell ya what, while everyone and their uncle was getting bearish and recessionary over the past 6 or so weeks, the market has pulled off a powerful almost-10% rally. Albeit on the back of only a few stocks, but the numbers are the numbers.
Absolutely classic wall of worry. The lesson is, and it is very hard to act on, is that when the whole world is bearish and dour, that’s the optimum time to invest, if stocks are your game.
“...on the back of only a few stocks”
My financial advisor pointed that out to me three weeks ago. If you take out the top 6 or 7 performing stocks (mostly tech, large-cap), the broader market is flat.
For basically the last two years.
Retail investors...
What does one do when they have a boatload of stock to get rid of prior to the major trough of a recession?
Answer: sell to gullible retail and make them think unicorns are back.
Show me one thing in the bond or currency markets that points to any form of improvement? It doesn't exist.
The equities market is absolutely tiny compared to those markets...
But can it be said the whole world is bearish when the markets moving up?
It would seem the bears are the contrarians...
Buy every metric I know we should be bombing, but the liquidity has to go some where ... If the fed doesn't do more to mop up the slosh , we'll see 10$ bread .
Yes , I'm getting hammered, short the market.
I keep trusting the fed to do the right thing... my bad.
A lot of “euro dollars “ will be heading our way soon.
The treasury needs to unload 2 trillion in new bonds this year
We need 10% rates or higher to even have a chance.
We are about to fall into a wage price spiral.
I'm considering capitulating and flipping my position. But that means I'm excepting that our economic system is being blown up ... intentionally.... and permanently ..sad day.
6% rates are not high. 19% is high.
Flat population growth, an aging population, and declining productivity don't support 6% interest rates. They don't even support 2% interest rates.
“The equities market is absolutely tiny compared to those markets...”
That’s a true truth, as I often say, but if it’s YOU who has the boatload of stocks then the tiny stock market is the one you should be paying attention to. No?
“Show me one thing....”
Fair point, but in my experience, you don’t make money arguing with the market. The market and financial media are exquisite at sending out false signals. The financial (and other) media have been utterly relentless sending signals suggesting that a recession is imminent for months and I believe the objective observer has to to ask “OK, where is it?” The only conclusion I can came to is that stronger the drumbeat of “recession coming”, the less likely that outcome.
Having made this kind of observation myself many times over the past 5-7 years, I can tell you this kind of summary or encapsulation is pretty much of zero value".
True. But all the mileage generated by the markets in this last period was available in QQQ and SPY. Very smooth, monotonic charts, plenty of chances to get involved.
Having made this kind of observation myself many times over the past 5-7 years, I can tell you this kind of summary or encapsulation is pretty much of zero value".
True. But all the mileage generated by the markets in this last period was available in QQQ and SPY. Very smooth, monotonic charts, plenty of chances to get involved.
A real dynamic ... a new one.
I was watching one of the youtube guys who sells white label financial advice to retail kids.
He was explaining a graph that showed a perfect set up for a down trend... he said” I’ve never seen this before, not sure what that means” then went on to extol the virtues of scalping this little stock. ... I like to call them the “buy the dippers”.
Young kids on their phones betting the rent ... it's out there .
Supported by hundreds of other kids doing “analysis” who simply play on the hope that enough folks follow them to move a small cap . They say buy , then they sell, it's the scammiest thing I've ever seen.
None of these kids have ever seen a down market. They really believe the market always goes up... maybe they are right.
“whole world is bearish “
But can it be said the whole world is bearish when the markets moving up?
It would seem the bears are the contrarians...
That is almost always the case. Bear markets really do not/can not last with the “modern” liquidity measures the Fed has invented
“whole world is bearish “
But can it be said the whole world is bearish when the markets moving up?
This is my core point: Yes, it can be said. But profit (both in business and in stocks) is not made from what is said. For one thing, who’s saying it? Honestly, by the time everyone is talking about some element of market behavior or internals, the effect is most likely over. But that is NOT ALWAYS TRUE.
Take this Bud Light thing. OK, so a zillion people immediately ceased their consumption of Bud Light. Do you think that every one of those beer drinkers stopped drinking beer? I’m sure you don’t. I’d bet you that overall beer consumption is within 1/2 of 1% of where it was pre-bubble boy.
There’s lots of news as to retail performance of late and this is widely read as an insight into the consumer (who is 70% of “the economy”) And yet while HD is tanking, LOW is en fuego. How can that be?
What's churning out there now is a global recession that didn't start with the US - but with China. It's then been winding its way through Europe, and then into the US.
Everybody is focused on the US market - thinking we're the driver of everything that might happen. We're not.
Then one can look at Japan and see the meteoric uprise of the Nikkei - even though the Japanese economy has been in a recession since December of 1989 - and is still in very bad shape. Their recent GDP is most likely due to a temporary euphoria over opening back up to foreigners after Covid.
Just some thoughts - I'm staying in short-term US Treasuries on the sidelines for now.
I don't believe economic recessions are events that happen by change - rather they are planned.
If you control the international banking system then giving out loose credit for a period of time makes complete sense.
Companies and people take that loose credit and purchase real assets.
Let that go on for a period then pull the rug out from under them - causing forfeiture of the real assets to the bankers. Creates tremendous wealth for them.
"Banks" used to be benches in dark alleys of Italy (quite literally). Sometimes people would get angry and benches would break - "broken bench" - "bankrupt".
Banks are now glistening towers that rule the world, with the power to bring down any governing official.
How did they get that way?
Through debt-based money - owning the future labor of the citizens.
“Just some thoughts - I’m staying in short-term US Treasuries on the sidelines for now.”
I don’t have one syllable of criticism of that approach “for now” and if I were where I wish I was, eg; sitting atop a decent year in the past 2 months, I’d be scaling out with more than moderate gusto.
“Just some thoughts - I’m staying in short-term US Treasuries on the sidelines for now.”
I don’t have one syllable of criticism of that approach “for now” and if I were where I wish I was, eg; sitting atop a decent year in the past 2 months, I’d be scaling out with more than moderate gusto.
And will remain so until both fiscal and monetary policies continue to contradict each other. Quite simply, every dollar that government spends that it does not have revenue works directly against the Fed’s monetary tightening policies. I’m am firmly of the mindset that to wright this economy that only one thing needs to be done. That’s is to balance the federal budget. That will require massive cuts in spending.
Perhaps required, but it will never happen. Our politicians live on spending more and more. We can't even cut the growth in spending.
“Flat population growth, an aging population,”
You haven’t noticed the young birth age influx at our southern boarder ? a trend...
More $$ chasing fewer goods is the definition of inflation.
and it looks to me like a lot of $$ that has been tied up in world reserves will be coming home soon.
The gov is looking to blow a lot of new cash in to the system is it not.
This $ has to go somewhere...
where do you propose it should/will go?
I say it should end up in savings accounts paying 5% or better... and put to work through local lending ..
But I’m afraid that’s not what will happen.
The dax is at 102.34 ... if it falls imports are more expensive ,exports do better. Who’s winning there?
I think we need to support the value of the dollar.
Higher interest rates do that.
Low rates have killed us.
....... but I have been wrong before ... just best guess
Population change, 2019-2020 ... +0.49%
Population change, 2020-2021 ... +0.31%
Population change, 2021-2022 ... +0.38%
Population change, 2022-2023 (estimated) ... +0.5%
Source: U.S. Population 1950-2023
These are Japan-like numbers, and they are magnified when you consider that our population is getting increasingly OLDER over time.
Throwing more money into the system isn't going to help. Eventually it will have to come crashing down as demand for products and services declines. The government can only fake it for so long.
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