Posted by simple_million on 27th of Jul 2022 at 07:10 pm
I think the idea is when Powell pivoted to 75bps and hawkish
rhetoric, he gained "credibility" and the market no longer feared
the 1970's-style situation you described, so it ripped higher.
THEN he could pivot dovish (lol) like today, with the market
ripping even higher. It makes sense if you think (as Powell
does) that easing supply chains, commodity prices topping, end of
war in Ukraine and a garden variety recession are enough to stamp
out enough inflation to at least take the hyperinflation narrative
off the table for now. Some inflation can stick around
without causing too much harm.
My own 2 cents, inflation is not as easy to predict or
understand as the Fintwit echo chamber would have you believe.
The actual depth of the recession we're getting into, whether
the US consumer can pay for things like food and housing going
forward, and whether inflation starts and stops regardless of what
the Fed does -- no one knows that stuff right now, the data has to
reveal that over time.
Thanks for sharing your thoughts. So tough right now.. It is
amazing what a period of days of upside can do. Of course many are
biased too as there is a lot of long term money at stake. I have
some out there too but am well prepared for a worse case scenario
allocation wise.
I gotta keep paying attention to the facts. Its one thing to
control hyperinflation and it's a whole other thing to have
earnings growth.. Growth ultimately drives stock prices.
One thing that really bothers me is we haven't had a true
capitulation. Big money ultimately is the buyer that bottoms
markets. They haven't even joined the party.
I continue to believe even a rally to 4200-4300 is distribution
to retail. The FOMO is so high here for it being a bear market.
Means a crash will likely come when everyone thinks the worst is
over again.
You'll notice in the chart that the Fed fund rate had to be over
the inflation rate to control it. We're so behind the curve but
everyone anticipates inflation will magically come back down to 2%.
Would be a first. I have no doubt that inflation will come down
hard soon but it will be sticky and not sustain at 2% like it needs
to for long term growth.
Not seeing how this gets fixed in 7 months at all. If I'm wrong
that's fine, I'll sell into major rallies and secure even more
peace of mind. I'm an operations guy at heart and you can't fix 3-4
things and grow consistently in an environment like this. I believe
the many companies who are warning, laying off workers, and guiding
down.
Let's see what GDP, PCE, and more earnings reveal. Today felt
good though I'm not getting complacent. It can and has turned on a
dime all year.
Newsletter
Subscribe to our email list for regular free market updates
as well as a chance to get coupons!
I think the idea is
SPX QQQ There's a question nobody can answer for me ...
Posted by simple_million on 27th of Jul 2022 at 07:10 pm
I think the idea is when Powell pivoted to 75bps and hawkish rhetoric, he gained "credibility" and the market no longer feared the 1970's-style situation you described, so it ripped higher. THEN he could pivot dovish (lol) like today, with the market ripping even higher. It makes sense if you think (as Powell does) that easing supply chains, commodity prices topping, end of war in Ukraine and a garden variety recession are enough to stamp out enough inflation to at least take the hyperinflation narrative off the table for now. Some inflation can stick around without causing too much harm.
My own 2 cents, inflation is not as easy to predict or understand as the Fintwit echo chamber would have you believe. The actual depth of the recession we're getting into, whether the US consumer can pay for things like food and housing going forward, and whether inflation starts and stops regardless of what the Fed does -- no one knows that stuff right now, the data has to reveal that over time.
Thanks for sharing your thoughts.
Posted by fundamentalvalues on 27th of Jul 2022 at 09:34 pm
Thanks for sharing your thoughts. So tough right now.. It is amazing what a period of days of upside can do. Of course many are biased too as there is a lot of long term money at stake. I have some out there too but am well prepared for a worse case scenario allocation wise.
I gotta keep paying attention to the facts. Its one thing to control hyperinflation and it's a whole other thing to have earnings growth.. Growth ultimately drives stock prices.
One thing that really bothers me is we haven't had a true capitulation. Big money ultimately is the buyer that bottoms markets. They haven't even joined the party.
I continue to believe even a rally to 4200-4300 is distribution to retail. The FOMO is so high here for it being a bear market. Means a crash will likely come when everyone thinks the worst is over again.
You'll notice in the chart that the Fed fund rate had to be over the inflation rate to control it. We're so behind the curve but everyone anticipates inflation will magically come back down to 2%. Would be a first. I have no doubt that inflation will come down hard soon but it will be sticky and not sustain at 2% like it needs to for long term growth.
Not seeing how this gets fixed in 7 months at all. If I'm wrong that's fine, I'll sell into major rallies and secure even more peace of mind. I'm an operations guy at heart and you can't fix 3-4 things and grow consistently in an environment like this. I believe the many companies who are warning, laying off workers, and guiding down.
Let's see what GDP, PCE, and more earnings reveal. Today felt good though I'm not getting complacent. It can and has turned on a dime all year.