No Sir, There Are No Rate Cuts
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2024-03-21 07:00 by Karl Denninger
in Federal Reserve , 645 references Ignore this thread
No Sir, There Are No Rate Cuts
[Comments enabled]

The market's reaction to the Fed Rate decision is utterly insane.

Obviously the market thinks rate cuts are imminent.  There's no evidence for this in the Fed Statement or data.

Specifically, the Fed strengthened its language on the job market in this statement, which would tend to remove said expectation, not add to it.

The Committee is strongly committed to returning inflation to its 2 percent objective.

Well, you're not headed there with allowing the market to keep believing that which you don't state, but which you also don't strongly stomp on.  That's a serious problem for the economy generally because inflation is most-certainly not headed back to 2% when, for example, both car and homeowner's insurance is rising at about a 20% annualized rate.  May I note that automobile insurance is 2.8% of the basket all on its own so 0.5% inflation is represented by that even if everything else was literally zero!

Never mind shelter costs are rising at close to triple the 2% target and that is 36% of the basket, so just taking that alone if everything else was zero they'd be at the target -- and, obviously, everything else is not zero.

Further, everyone knows that the CPI is a joke at this point -- especially when it comes to mandatory spending on things like shelter, fuel and insurance of all sorts.

I can't fathom how this is a bullish statement, particularly given the credit issues at the consumer level and maturing corporate debt that will have to be rolled over the next year or two -- and then at an increasing rate in the years beyond.  Most of this was refinanced in the last five to seven years and that was at rates that were much lower than those of today.

I saw nothing in this statement that implied you should be buying anything -- except the short end of the Treasury curve.

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