Posted on 01/05/2022 2:26:11 PM PST by John W
Stocks fell sharply Wednesday, with the Dow Jones Industrial Average suffering its first decline of 2022, as Wall Street geared up for potentially tighter U.S. monetary policy.
Rates also jumped, putting pressure on equities, after the minutes from the Federal Reserve’s most recent meeting showed the central bank has discussed reducing its balance sheet shortly after it raises rates later this year.
The Fed is tapering its bond purchases now and has already indicated to the market that it will raise rates soon after it finishes that taper in March. But the market is awaiting indications from the Fed on what it will do with its nearly $9 trillion balance sheet once it’s done increasing it. The minutes show officials to be considering shrinking the balance sheet along with raising rates as another way to remove policy accommodation.
“Almost all participants agreed that it would likely be appropriate to initiate balance sheet runoff at some point after the first increase in the target range for the federal funds rate,” the meeting summary stated.
(Excerpt) Read more at cnbc.com ...
Imagining actually doing something that would help. I remember when the nation suffered through the Volker medicine. When Volker raised the rates I believe the deficit was less than $1T. What’s the next option?
Last year was great. Predictions for this year are modest but no one knows, it depends on what one invests in. The deciding factors for this year aren’t easily predictable.
After the last two years I’d be fine with hanging flat and take the dividends.
Today the Markets reacted to a perception of slightly tougher FED talk, common.
Historically it takes 3 or 4 rate hikes to have a REAL effect on the money supply. It seems the new buzzword for this year is inflation. Well, DUH. But don’t worry, this problem that has been 10-15 years in the making will be laid directly on Trumps doorstep, so it’s OK. In fact, once that lie has been firmly implanted, the worse it gets the better. Feel better now? Hold on to your butts, people trying to get in there.
“Almost all participants agreed that it would likely be appropriate to initiate balance sheet runoff at some point after the first increase in the target range for the federal funds rate,” the meeting summary stated.
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Can anyone translate this from the bureaucratese ?
1. U.S. Treasury bills are being sold at or near historically low interest rates.
2. Anyone who is buying 10-year Treasury bills today is getting paid an annual rate of about 1.7% … at a time when the inflation rate is bein on reported around 6% to 8% and is more likely around 10% to 12%.
3. Nobody in their right mind would do such a thing, except the U.S. Federal Reserve … which is buying up these Treasury bills to delude Americans into thinking we can run up $30 trillion in Federal debt without paying a price for it.
4. This can’t go on forever.
Real Estate is still doing crazy stuff in my area of Florida. Average suburban houses that were $250k-$350k at the height of the 2008 RE bubble are now $350k-$500k here.
Rolex watches are impossible to buy new at sticker price and are selling for thousands above retail on the grey market.
When this economic bubble bursts it will almost certainly be worse than 2008 due to the treasury debt that is super charging the economy.
Real estate in North Idaho is going through the roof because idiot libs from CA are lining up for houses and the opportunity to vote Dem in a red state.
Buy the f**king dip!
Estimated tax payments are due 1/15. Proceeds clear friday, cash transfer to checking Monday, good funds on Tuesday, mail to irs
Rinse and repeat.
My M-in-law was looking very prosperous maxxing out her credit cards. The pain started later when she could not make even minimum payments on all her cards.
As the national debt climbs, the interest due also climbs. If interest rates go much higher, it will be disaster. It has been relatively easy to pay off the interest on debt due to artificially low interest rates.
I missed dip today,hoping tomorrow continues dip so I can do dance too, Keeping some on sidelines for seasonal cash needs and/ or correction if lucky.
Did you have to ruin my day? I need to send a check on April 15th which could buy 2 Tesla cars. May be I will sell my wife. Never mind, that will not cover the gas to bring the car home.
Thank heavens we're so disciplined as to not take a peak any more often.
I was going to complain that the article was missinf the most important piece of infromation. I went to the source article to see that the poster ommitted the second paragraph.
The blue-chip Dow Jones Industrial Average ended the day down 392.54 points, or 1.07%, at 36,407.11. The 30-stock average hit an intraday record earlier in the session. The S&P 500 fell 1.94% to 4,700.58. The tech-heavy Nasdaq saw its biggest one-day loss since February, losing 3.34% to end at 15,100.17.
So the market went down 1% after hitting an intraday record.
10 years ago, on January 1, 2012 the market started at 12,860. 392 points off of that would have been 3% loss.
1% is background noise.
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