Things look bad. There are elements similar to the year 2000 bursting of the “Dot-com” Bubble. There are parallels to the much more systemic 2008 mortgage finance Bubble collapse. Yet, for me, this week rekindled more distant memories.
There’s a Cat Five Hurricane lurking somewhere out there, yet the various models – unreliable in the best of times – these days greatly diverge in the timing, size, location and ferocity of Hurricane Peerless’ landfall. Meanwhile, each month of elevated price pressures ensures inflation becomes more deeply entrenched and difficult to contain.
How much of this is just superficial stuff – an expedient bordering on a ruse? Does the Fed have the resolve necessary to mount a serious inflation fight, one that would invariably unfold with significant market and economic turmoil?
Esther George could not have been much clearer. Inflation is too high and must come down. Financial conditions must tighten, and financial markets are a key monetary policy transmission mechanism. And the Fed today has little clarity on how far this tightening process will need to go.
Global Bubble deflation gathered additional momentum this week. The U.S./global tech Bubble collapse accelerated. Hit by panic “runs”, the historic cryptocurrency mania is coming completely unglued. And even more historic Chinese apartment, financia…
The Global Bubble, several decades in the making, is in the process of bursting. A new cycle is emerging, replete with extraordinary uncertainties. Acute instability has become a permanent feature, at least through the cycle transition phase. These …
Markets could soon be clamoring for assurances of the Fed’s “buyer of last resort” liquidity backstop, while our central bank is preparing to begin withdrawing liquidity by selling Treasuries and MBS.
It increasingly appears the world has reached a critical historic juncture – the transition away from an unparalleled market, financial and economic up-cycle.
A $95 billion monthly reduction of assets (removal of monetary stimulus) would be a case of the Fed Playing with Fire.
Inflation, a Hawkish Fed, Spiking Bond Yields, War, China and Acute Instability. Where to begin? When it appeared less likely the War was spiraling out of control, it was time to squeeze the shorts and force an unwind of bearish derivative positions. Longer-term developments – including a momentous reshaping of the “world order” – are essentially irrelevant to stocks.