The Fed is sounding more and more aggressive

[IronLionZion]

https://www.cnn.com/2022/04/06/investing/premarket-stocks-trading/index.html

Investors are weighing that question after a key member of the central bank who has historically favored a gentler approach to raising interest rates talked tough about the central bank's need to fight rising prices.

"It is of paramount importance to get inflation down," Federal Reserve Governor Lael Brainard said in a speech Tuesday.
She said that the central bank would move to "rapidly" shrink its nearly $9 trillion balance sheet this year, unraveling the huge bond-buying program launched at the start of the pandemic, while also hiking rates.

Brainard's commentary "cleared the way" for a super-sized interest rate hike at the Fed's next meeting in May, according to Bespoke Investment Group.

David Madden, an analyst at Equiti Capital, said the moves were sparked by the "realization" that central banks are set back to pull back support for the economy even faster than had been expected, even though the war in Ukraine has clouded the outlook for growth.

If Lael Brainard says it, then it's very likely to happen. They need to get inflation under control. Prices have been high for longer than expected and the job market is stronger than it's been in decades.

[doc03]

1. That spells recession. nt

[roamer65]

2. Definitely.

[WarGamer]

20. They're already saying Q3 of this year...

With some more experts saying in 2023...

It's a difficult position... recession or runaway inflation leading to the mother of all burst bubbles.

[Hugh_Lebowski]

3. It'll be interesting to see what happens when most inflation is actually being caused by

overall global resource depletion and the fact that there's way the fuck too many people on the planet.

There's not going to be any 'interest rate' jiggering that's going to do a whole lot about that. It's going to be physics and chemistry and just basic reality in play then.

IMHO, that time is coming soon, if it's not, in fact, beginning to happen now.

[uponit7771]

10. The current core inflation isn't organic, that problem the fed should address by telling consumers

... not slowing capital down.

There are no record profits if inflation due to organic price of good wages were actually in the mix

[Hugh_Lebowski]

13. Oil companies are leveraging 'scarcity' to make record profits right now ...

Sure, it may not entirely be 'organic scarcity', but the same principles can apply regardless of whether the scarcity is natural or not, esp. if there's monopolies, or near-monopolies. Of which there are many.

So I kinda reject your premise on those grounds.

I'm not saying resource depletion is the current cause of all or even much of the current inflation. But the day will come when it is, and I don't think it's far off. We've depleted the worlds topsoil, the oceans are polluted and massively over-fished, and the rainforests we need to help clean the atmosphere are being clear-cut to make way for cash crops and cattle-raising, just to name a few major problems we're facing as citizens of Earth.

Eventually the problems inherent to conducting a purely growth-based economy on a planet with finite resources ... are going to bite us all in the ass. Hard.

[walkingman]

17. They have been doing it forever - I despise oil companies - living it Texas you

can't get away from their influence including stinky air. Oil companies are the cancer of planet earth and to make matters worse we could do away with their stink in a large part if we just had the political will.

[uponit7771]

18. There's no scarcity, we're pumping as much oil as we did nearly before CV outbreak. The oil ...

... companies are trying to make up profits, watch FAUX Business or MSNBC and they talk about it like we're just supposed to eat it.

That's alright, there are already indicators of buying slowing down like in the early 90s.

Companies get greedy and now their profits are going to get got.

[Hugh_Lebowski]

21. I understand what's going on (and has gone on forever)

The point I'm making is that scarcity, whether truly due to resource depletion, or purposefully holding production down ... can drive up profits.

In THIS case, right now, it's almost surely artificial, I agree.

However, the general public won't necessarily know the difference when it (eventually) switches to genuine scarcity, and the oil companies may very well still make record profits, at least for a while.

Further, I'm pretty damn sure TPTB WILL try to hide it when the oil starts running out, because the effect of that realization by the public and business leaders will be catastrophic to the economy and markets.

So, I don't consider 'record profits' to be de-facto proof of which type of scarcity is actually happening.

[empedocles]

14. Good point. Suspect the fed just responding to the inflation 'drumbeat', for now.

[uponit7771]

19. +1, like they did in the early 90s and it was premature then too

[BannonsLiver]

11. Don't get your hopes up.

Probably a little early for all of that.

[walkingman]

4. Personally I wish they would just shut up and do their job. These interviews are disruptive.

[doc03]

5. Being retired I will take recession over inflation. nt

[Historic NY]

6. At least we won't get pennys for our money.

[Tomconroy]

7. Their record of avoiding recessions when they raise rates

is pretty ugly.

[IronLionZion]

9. They just don't want to admit it

Recession would cause some Americans to buy less, travel less, etc. The wealthy will be perfectly fine while less wealthy folks feel the squeeze.

[uponit7771]

8. There was 5.6% YoY wage growth, what historically outpaced inflation are they talking about ?!

[IronLionZion]

12. Prices of stuff have grown the most in 40 years

Repubs won't stop obsessing over it while ignoring the wages and job growth and record low unemployment. It's an election year so there could be consequences.

[bigtree]

15. those inflationary pressures are ephemeral

...and likely to improve within the next year.

Prices have risen mostly due to energy costs and supply disruptions due to the pandemic. Oil prices are artificially manipulated through production and adjust downward when people drive less due to the high cost of filling up their tanks. As the world markets maneuver away from Russian oil and replace those sources, (Saudis could pump more, Venezuela can provide more), there won't really be an oil shock that has some lasting imprint from the present crisis.

This has the feel of the Fed rushing to take advantage of this temporary bump in inflation to raise rates. It would be better to wait for these ephemeral factors to play out.

[gratuitous]

16. I agree

But the Fed isn't interested in prosperity for the lower classes (e.g. the bottom 80%), only appeasing the insatiable appetite for more wealth of the most well-off. They have to act quickly before the ephemeral inflationary pressures subside and working stiffs find they have more money in their pockets at the end of each pay period. Can't let the proles get used to having a financial cushion!