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  • #46
    Originally posted by Thoughtful Monk View Post
    With President Biden banning Russian oil, watch out for more sharp declines.

    Also watch out for Chairman Powell to change course and the next rate hike is high that 0.25%.
    so maybe it's time to invest in US Oil companies? Exxon/Chevron are both on the rise.

    Comment


    • #47
      Originally posted by Sparko View Post

      so maybe it's time to invest in US Oil companies? Exxon/Chevron are both on the rise.
      I don't know. It's going to take a bit for the market to reach bottom though it will probably be sometime this year. I am planning to invest more in the market later this year.
      "For I desire mercy, not sacrifice, and acknowledgment of God rather than burnt offerings." Hosea 6:6

      "Theology can be an intellectual entertainment." Metropolitan Anthony Bloom

      Comment


      • #48
        Originally posted by Thoughtful Monk View Post

        I don't know. It's going to take a bit for the market to reach bottom though it will probably be sometime this year. I am planning to invest more in the market later this year.
        Yeah I have a lot of cash sitting in my Roth IRA, waiting for the market to hit bottom and start to climb back up. I did purchase a few shares of Exxon stock just to see what happens.

        Comment


        • #49
          Originally posted by Thoughtful Monk View Post
          Also watch out for Chairman Powell to change course and the next rate hike is high that 0.25%.
          I'm confused by this. Are you saying you believe Powell will reverse policy and continue QE?
          "What am I doing here?" -- Joe Biden 2021

          Comment


          • #50
            Originally posted by seanD View Post

            I'm confused by this. Are you saying you believe Powell will reverse policy and continue QE?
            I don't know about QE. Ukraine has certainly made all bets off on everything.

            I am trying to say I won't be surprised if the next rate hike ends up being 0.50% instead of the advertised 0.25%.
            "For I desire mercy, not sacrifice, and acknowledgment of God rather than burnt offerings." Hosea 6:6

            "Theology can be an intellectual entertainment." Metropolitan Anthony Bloom

            Comment


            • #51
              Seems to me Biden is doing his best to recreate all of the disasters of the past century in one term.

              Super Inflation
              Highest gas prices
              New World War
              Pandemic
              1929 Stock Market Crash

              Next: Great Depression


              Comment


              • #52
                Originally posted by Thoughtful Monk View Post

                I don't know about QE. Ukraine has certainly made all bets off on everything.

                I am trying to say I won't be surprised if the next rate hike ends up being 0.50% instead of the advertised 0.25%.
                Okay, gotcha. You may be right.
                "What am I doing here?" -- Joe Biden 2021

                Comment


                • #53
                  Originally posted by Thoughtful Monk View Post

                  I don't know about QE. Ukraine has certainly made all bets off on everything.

                  I am trying to say I won't be surprised if the next rate hike ends up being 0.50% instead of the advertised 0.25%.

                  Well, I was wrong. Today's hike was only 0.25%. They are projecting six more this year and if I understand the press release correctly, they've opened the option for 0.50% increases in the future.
                  "For I desire mercy, not sacrifice, and acknowledgment of God rather than burnt offerings." Hosea 6:6

                  "Theology can be an intellectual entertainment." Metropolitan Anthony Bloom

                  Comment


                  • #54
                    To see how the cpi understates true inflation go here. I feel that's important with this article because the inflation number we have now (7.9%) is much higher, likely in the double digits, if it were measured the way cpi was measured three decades ago.

                    The Fed’s Feckless Inflation Fight

                    The Fed is supposedly about to step into the ring to fight inflation. But all indications are it’s going to be a feckless fight.

                    Gold flirted with an all-time record high last week driven in part by safe-haven demand due to the geopolitical uncertainty caused by Russia’s invasion of Ukraine. But as the war drags on and the panic subsides, that safe-haven bid seems to be unwinding.

                    Now investors have turned their attention back to the Fed. When the war broke out, people thought it could slow the central bank’s monetary tightening plans. But with a 7.9% CPI print for February, the mainstream is back on the tightening bandwagon. They’re betting the central bank is going to tighten fast and hard, and they’re selling gold on the expectation of higher interest rates.

                    But even if the Fed does what the market is betting it will do, it’s not going to put a dent in inflation, and interest rates will not rise high enough to undermine gold.

                    According to a Reuters article:

                    A key money market indicator is now pricing US interest rates peaking at a higher level than previously forecast, as traders bet that the Federal Reserve will prioritize stamping out inflation over fretting about risks to economic growth.”

                    And just how high are they betting interest rates will rise?

                    2.5%

                    That’s it.

                    They think the Fed will push interest rates to 2.5% by mid-2023.

                    Goldman Sachs economist Sven Jari Stehn is betting on the high side. He thinks the so-called “terminal rate” will come in between 2.75 and 3%.

                    This is supposed to “stamp out” 7.9% inflation. (Which is really 15-plus percent inflation is measured honestly.)

                    Paul Volker went to war against inflation in the early 80s. He pushed interest rates to 20%. He had to in order to get ahead of the inflation curve.

                    In other words, if we accept the government’s 7.9% CPI, the Fed would have to push interest rates to at least 9% to get above the inflation rate in order to “go to war” with inflation.

                    And they’re talking about 2.5% as if it were some kind of nuclear bomb.

                    The thinking here is muddled and silly.
                    Just for reference, historically speaking, the last time the Fed fought inflation with its policy was in the 70-80s when Paul Volcker raised the fed funds rate to 20% -- that's TWENTY percent -- when peak cpi was around 15%.
                    "What am I doing here?" -- Joe Biden 2021

                    Comment


                    • #55
                      Originally posted by Thoughtful Monk View Post
                      Well, I was wrong. Today's hike was only 0.25%. They are projecting six more this year and if I understand the press release correctly, they've opened the option for 0.50% increases in the future.
                      I'm sure they will raise rates as much as necessary. But I don't think anyone can really predict how much will be necessary.

                      Comment


                      • #56
                        Originally posted by Stoic View Post

                        I'm sure they will raise rates as much as necessary.
                        No, they won't. They can't because the debt is too insanely high, far higher than in Volcker's days.
                        "What am I doing here?" -- Joe Biden 2021

                        Comment


                        • #57
                          Originally posted by seanD View Post

                          No, they won't. They can't because the debt is too insanely high, far higher than in Volcker's days.
                          Good point.

                          Comment


                          • #58
                            Originally posted by seanD View Post


                            Another thing to keep an eye on is their balance sheet bond reduction (to see if they really actually reduce it)...

                            So far it's at 8.9+ trillion...





                            Though nothing too substantial, the balance sheet has increased (by billions), thus QE has continued (so far)...

                            "What am I doing here?" -- Joe Biden 2021

                            Comment


                            • #59
                              What was "QE" again?

                              Comment


                              • #60
                                Originally posted by Sparko View Post
                                What was "QE" again?
                                It's when the Fed prints money and uses it to buys bonds -- whether corporate or government. The latter is called monetizing the debt = debt that isn't covered by taxes or outside lenders.

                                The former is a sweet deal select corporations (typically transnational banks) have with the Fed. IOW, imagine if you ran a corporation and you could offload all your debt and liabilities onto an government entity that can print an endless supply of money and buy it all up.

                                Both (as well as keeping interest rates low) makes stock holders confident that there won't be another Lehman moment or that government won't falter because they can't pay their debt.

                                That's why investors get panicky when those socialist guarantees are removed.
                                "What am I doing here?" -- Joe Biden 2021

                                Comment

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