here's a question for you
How do you know that the Federal Reserve System is a bad idea?
Strong macro-economic numbers = bearish price action in equities.
It is called bizzaro-world.
18 Replies
Its called max pain
Yeah, i get it. I think that we should be careful about using the word "should" with respect to the financial markets. But really, strongly positive news "should" be max pain for the bears. Or it should be some pseudo random balanced strategy or something. But it's not. For as long as I can remember, the macro trade is just "discount the fed."
I wonder when these games started. Do we have any old timers here, were markets just trading the Fed in the 70s, 80s, and / or 90s? I kind of think not. It seems like more of a post '08 phenomenon to me. But I really don't have much of a clue about pre '08 trading.
It's been happening forever. But it's only a short-term situation. Traders vote that rates going up (or not going down as fast as they hoped) will dampen profits so share prices go down. But, as time moves on, profits get counted and share prices go up.
It's been happening forever. But it's only a short-term situation. Traders vote that rates going up (or not going down as fast as they hoped) will dampen profits so share prices go down. But, as time moves on, profits get counted and share prices go up.
Yes, clearly the extremes inform the mean, there is profit taking, etc. And the market is constantly "calibrating."
I guess what I am saying is, it seems to me that if the unit of measure with which the calibration is performed gets expanded and contracted exogenously, then we add confusing complexity and dynamics to the calibration process.
I suppose one could argue that it is not exogenous if the Fed follows its mandate and is really data driven. But then, why not just implement an algorithm?
TLDR: my same story --> rates should be set by the market. I posted because I was inspired by the employment data and price action.
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will learn a great deal about the neighborhood, transport access, and the nearby amenities that can make a significant difference in long-term satisfaction. These are normally far more important than slight variations in layout.
"bad news = good news" became distinctly more a thing after GFC when it became clear the 'fed put' was even stronger and more supportive than imagined
EMHers try to make sense of the current regime by arguing that discount rate (denominator) effect swamps the corporate profit numerator. i think in truth we're just in a "heads i win tails you lose" regime for capital holders where any near-term pain is backstopped with fed liquidity, with offsetting losses exported to the public via currency depreciation
Good labor news is bad news when inflation is up because of the "dual mandate", right? If inflation was under target then I think good labor news would be good news for the market.
I wonder what yield curve would look like if it was entirely set by the market?
Core CPI YoY was 2.6% VS 2.7 estimated, so that's good
lol
The inability for normies to understand that COVID wrekt global supply chains is fully unsurprising but also incredibly disappointing in a general humanities sense
The inability for non-normies to see the difference in reporting is fully unsurprising but also incredibly disappointing in a general humanities sense.
hint: no one is commenting or comparing the 6% inflation vs the 2.7% inflation. it is commentary on the reporting.
That you think reporting should not consider context is also fully unsurprising yet generally disappointing
What is false or misleading about anything in those reports?
Feb 23 headline inflation was 6%, but it was 8.2% in Oct 22. That is still high but falling.
The Fed's target is 2%. We were at 2.7% core and headline inflation in Dec 25 and have between 2.7 - 3% since last June. That is persistently over the target, i.e. persistent cost of living challenges.
What is false or misleading about anything in those reports?
Feb 23 headline inflation was 6%, but it was 8.2% in Oct 22. That is still high but falling.
The Fed's target is 2%. We were at 2.7% core and headline inflation in Dec 25 and have between 2.7 - 3% since last June. That is persistently over the target, i.e. persistent cost of living challenges.
It's the CNN narrative 😀
Bidens 6% inflation = great news!!!!
Trumps 2.7% inflation = doom and gloom
It is impossible to hate news media enough!
