Market Crash watch

[Thoughtful Monk]

Article from Bloomberg about the next Fed meeting may raise rates 0.50%. The officials quoted in the article have year-end estimates of 2.5% to 3% for prime. I'll go with prime will end up at 3% and not surprised if higher.

https://www.bnnbloomberg.ca/fed-offi...igor-1.1742076

[seanD]

Article from Bloomberg about the next Fed meeting may raise rates 0.50%. The officials quoted in the article have year-end estimates of 2.5% to 3% for prime. I'll go with prime will end up at 3% and not surprised if higher.

https://www.bnnbloomberg.ca/fed-offi...igor-1.1742076

This is what I'm most interested in...

Bullard also wanted the central bank to commence shrinking its bloated $9 trillion balance sheet at last week’s meeting, a process that the fed chair told reporters could start in May.

I'll believe the shrinking balance sheet when I see it. And then if they actually stick to it.

[Thoughtful Monk]

It will be interesting to see if the Fed really starts shrinking its balance sheet. Either way, it's going to be a tough year economically for both individuals and corporations. I doubt Washington will come up with anything effective to alleviate the situation. Thankfully I've spent the last couple of years reducing my debt, so I have less exposure to rising interest rates now.

[seanD]

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

Still pumping free money...

[Thoughtful Monk]

For the first time, saw an article that the Fed may hike rates 0.75% sometime this year. Heaven help all that Government debt and consumers with adjustable rate loans.

[seanD]

There are multiple economic headwinds all about to clash at once:

Government debt
Deficit spending
War/Sanctions
Global economic instability
Signs of economic slowdown/recession
Inflation (stagflation) getting worse

And amidst all that, the Fed is starting to tighten. We have yet to see the economic turmoil that 2022 will bring.

[Sparko]

There are multiple economic headwinds all about to clash at once:

Government debt
Deficit spending
War/Sanctions
Global economic instability
Signs of economic slowdown/recession
Inflation (stagflation) getting worse

And amidst all that, the Fed is starting to tighten. We have yet to see the economic turmoil that 2022 will bring.

My 401K is still trending down. But slower since I moved 1/3 of it into a stable fund for now. My contributions are still going to buying stocks though, hopefully buying the stocks at the low prices will pay off when the market takes off again eventually.

[seanD]

My 401K is still trending down. But slower since I moved 1/3 of it into a stable fund for now. My contributions are still going to buying stocks though, hopefully buying the stocks at the low prices will pay off when the market takes off again eventually.

I should add that I don't believe covid pandemic is over. I believe we're just in a state of limbo like we were spring of last year before the next scary variant pops up out of nowhere. But that's admittedly more speculatory on my part. Those situations listed below will without doubt bring stages of crisis events to the US in the coming years.

Government debt
Deficit spending
War/Sanctions
Global economic instability
Signs of economic slowdown/recession
Inflation (stagflation) getting worse

It should be a gradual build until it reaches a crisis crescendo, unless of course we have a nuclear war.

[Sparko]

I should add that I don't believe covid pandemic is over. I believe we're just in a state of limbo like we were spring of last year before the next scary variant pops up out of nowhere. But that's admittedly more speculatory on my part. Those situations listed below will without doubt bring stages of crisis events to the US in the coming years.

Government debt
Deficit spending
War/Sanctions
Global economic instability
Signs of economic slowdown/recession
Inflation (stagflation) getting worse

Yeah I agree. There is so much going on. All bad.

It should be a gradual build until it reaches a crisis crescendo, unless of course we have a nuclear war.

If that happens, I don't think it matters what happens to the market.

[Thoughtful Monk]

Looks pretty definite the next rate hike will be 0.50%. Market already declining. I think the Fed's chances of a 'soft landing' are rapidly disappearing.

[Sparko]

Looks pretty definite the next rate hike will be 0.50%. Market already declining. I think the Fed's chances of a 'soft landing' are rapidly disappearing.

seems like if they keep spreading out the "bad news" then the market will continue to do badly as it reacts to each new increase. Better to rip the bandaid off quickly and get it over with so we can just deal with it and move on.

[seanD]

seems like if they keep spreading out the "bad news" then the market will continue to do badly as it reacts to each new increase. Better to rip the bandaid off quickly and get it over with so we can just deal with it and move on.

The more gradual they tighten, the less blame they'll get in the long term, or so they hope. If the Fed went all Volcker on us and a sudden market crash of say 80%, for example, occurred over a course of a few days, the blame would fall squarely on the Fed's actions, whereas if it's a gradual bear market of 80% over the course of the entire year, with peaks and dips in between, they can blame Putin or any number of crisis situations that arise between now and then.

The problem for the Fed is the bubble they've created that they're now trying to slowly deflate is immense and unprecedented. Volcker never had to deal with anything like this.

[Sparko]

The more gradual they tighten, the less blame they'll get in the long term, or so they hope. If the Fed went all Volcker on us and a sudden market crash of say 80%, for example, occurred over a course of a few days, the blame would fall squarely on the Fed's actions, whereas if it's a gradual bear market of 80% over the course of the entire year, with peaks and dips in between, they can blame Putin or any number of crisis situations that arise between now and then.

The problem for the Fed is the bubble they've created that they're now trying to slowly deflate is immense and unprecedented. Volcker never had to deal with anything like this.

Putin again. It's like they are saying he is in charge of our economy. Funny that. They claim the President can't effect inflation but some dictator halfway around the world can.

[seanD]

Putin again. It's like they are saying he is in charge of our economy. Funny that. They claim the President can't effect inflation but some dictator halfway around the world can.

There were a whole lot of folks that wanted Volcker strung-up for his aggressive actions against the economy even back then when things were but a fraction of dire levels -- i.e. debt, money printing, stock market bubble, etc. -- that they're at now. I can see why the Fed has to come up with any excuse and hope it sticks. Though it's possible that they''ll eventually throw Powell to the wolves, which might explain why the Biden admin kept him at the Fed, in spite of the fact he was Trump's pick. Considering that the Biden admin has done everything to distance themselves from Trump and his policies, it's odd that they kept Powell and didn't appoint someone else (like the first black woman!), which Biden was free to do.

[Thoughtful Monk]

Fed did the 0.5% increase yesterday. Stock Market is acting like was a total surprise and is down about 3% I read. I'm hunkered down to ride out the storm.

On a side note, I'm seeing stuff at work that indicates to me it's really going to hit the economy in May and June. It's going to be a rough year. I think most of the posters on this thread already knew that.