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  • Powell: We’re Prepared to Raise Rates Further if Appropriate

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  • Powell: Inflation: Progress and the Path Ahead

    From federalreserve.gov

    Good morning. At last year's Jackson Hole symposium, I delivered a brief, direct message. My remarks this year will be a bit longer, but the message is the same: It is the Fed's job to bring inflation down to our 2 percent goal, and we will do so. We have tightened policy significantly over the past year. Although inflation has moved down from its peak—a welcome development—it remains too high. We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective. Today I will review our ... (full story)

thank God l was already out of market, l would have be a victim of the up and down
Yea it's a big yo-yo but no definites , those are big ifs...hmmm
Quoting hifamily
thank God l was already out of market, l would have be a victim of the up and down
What a big move. Though USD is likely still close short today. Because the Market needs to be sure they're truly in control of inflation. I await other FED's comments.
Ill wait for ECB chief later in the day.
Quoting Banditten
Ill wait for ECB chief later in the day.
yes l was able to enter the trade M1 on GOLD for quick green pips and am now 3% on my prop account
What i understand is totaly not hawkish, but not full dovish also. i sense fears about if they have gone too far and may be recognized dovish in my opinion.
Dollar is KING for the rest of 2023 AND 2024
"Policy rate restrictive, but Fed can't be certain what neutral level is"

Well if they do not have a level where neutral is, they certainly do not know where to pivot.
Fed is reintroducing Risk into markets and have removed the Fed Put.
Fed Put being that pivot point in case of trouble emerging, which much of market has believed inevitable.
Those with risk exposure are now going to actually get subjected to Risk.
For many managers, having never had to face risk will be a new experience.
Safety and Yield continues to look attractive until the dust settles.
Quoting foto
"Policy rate restrictive, but Fed can't be certain what neutral level is" Well if they do not have a level where neutral is, they certainly do not know where to pivot. Fed is reintroducing Risk into markets and have removed the Fed Put. Those with risk exposure are now going to actually get subjected to Risk. For many managers, having never had to face risk will be a new experience. Safety and Yield continues to look attractive until the dust settles.
Whats the average on "the Street"? many of them dont even know what inflation and interest rates is? they made their million bonuses in a safe environment. It is only positive that investing in the markets comes with a risk. For much too long investing in the markets has generated a too high risk free return. On the few occassions where troubles has brewed the public has bailed out the markets and fund managers still been able to walk away with bonuses. So wilcome the risk back at the table.
Whom speech, what is the speech, all are bogus coz this market is completely blind for the investors.....
Quoting Banditten
{quote} Whats the average on "the Street"? many of them dont even know what inflation and interest rates is? they made their million bonuses in a safe environment. It is only positive that investing in the markets comes with a risk. For much too long investing in the markets has generated a too high risk free return. On the few occassions where troubles has brewed the public has bailed out the markets and fund managers still been able to walk away with bonuses. So wilcome the risk back at the table.
You express this situation better. This is why so much bidding has taken place as no one understands there is a potential for downside. It has been all one sided far too long, which contributes to inflation expectations.
I prefer to sit with some yield and safety until this receding tide shows who is standing naked, as Warren Buffet explained it.
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Its clear euro is forming a double bottom
Quoting Guest
Its clear euro is forming a double bottom
،
If market does start to reassess risk parameters the JPY carry trade is vulnerable.
It has been a sure thing trade for some time.
Powel Hawkish: More doors open for raising rates.

Fed’s Powell: We’re Prepared to Raise Rates Further if Appropriate
Fed’s Powell: We Intend to Hold Rates at Restrictive Level Until Confident Inflation’s Moving Sustainably Down to 2%
Quoting Banditten
Ill wait for ECB chief later in the day.
Don't bother, it's not that her comments aren't important or relevant it's the TIME that she's speaking. Friday afternoon 2 hours before market closes - no liquidity as the "Big Boys" are already in the Hamptons sipping on Long Island Ice Tea's....
Quoting fx6996
{quote} Don't bother, it's not that her comments aren't important or relevant it's the TIME that she's speaking. Friday afternoon 2 hours before market closes - no liquidity as the "Big Boys" are already in the Hamptons sipping on Long Island Ice Tea's....
After all, the one with the gold makes the rule… and they'll make that rule on Sunday night
Do not just look at the CHART, READ the CHART , the TRUE DIRECTION of the MARKET is in the RIGHT reading of the CHART. Do not mind their TALK so much. Wait a minute, it seems, something will soon happen. Thanks.
Quoting Chinwe4real
Do not just look at the CHART, READ the CHART , the TRUE DIRECTION of the MARKET is in the RIGHT reading of the CHART. Do not mind their TALK so much. Wait a minute, it seems, something will soon happen. Thanks.
While I understand your point of view I happen to take the other side of the coin. WHY?

Charts tell a story about what HAS HAPPENED.

A chart can't tell you what direction price is going because a chart is a lagging indicator. Price action is the ONLY way to tell what price is doing and what it WILL do.

I am a firm believer in Fibs and EW (not very good at EW but I agree with the mentality) - but Fibs can't predict. EW can predict ASSUMING you have the correct count...

Also when you talk about the direction of the market what time frame are you talking about?

Look at the huge swings today with EUR/USD. Did your charts tell you about the wild swing today? Looking at a 4 hour chart you wouldn't notice the up and down.

Lastly, I'm not trying to start an argument I merely wanted to present another POV
Is it smart to go long on EURGBP 4H chart?
all price action today no have impact for anything ..... only playing drama
Follow price direction
all the rumors that the USD will weaken = pure nonsense ... today's price movements are only to satisfy the appetite of price manipulation players .... including price manipulation in eurusd when Germany's sentiment business data was very bad
Follow price direction
Quoting Banditten
Ill wait for ECB chief later in the day.
bring EURUSD to 2.0000 as this man want
Follow price direction
Quoting foto
"Policy rate restrictive, but Fed can't be certain what neutral level is" Well if they do not have a level where neutral is, they certainly do not know where to pivot. Fed is reintroducing Risk into markets and have removed the Fed Put. Fed Put being that pivot point in case of trouble emerging, which much of market has believed inevitable. Those with risk exposure are now going to actually get subjected to Risk. For many managers, having never had to face risk will be a new experience. Safety and Yield continues to look attractive until...
Most managers are more subject to moral hazard: They will keep taking on risk until they're sacked.... After all they've got divorces and boarding school fees to pay.

Humans don't make decisions to maximize utility... whether professional or otherwise. Most central bankers don't understand this.
Quoting ww3361
{quote} Most managers are more subject to moral hazard: They will keep taking on risk until they're sacked.... After all they've got divorces and boarding school fees to pay. Humans don't make decisions to maximize utility... whether professional or otherwise. Most central bankers don't understand this.
Message from both Powell and now Lagarde to firms is bailouts not such a sure thing.
De-Risk or go bust.
Firms have risk management and that would address exposure which in turn affects allocation models.
Will take couple days to see if there would be impact.
Can not pay alimony and private schools without a Firm behind it all.

Today a different message coming from CB heads. Might again be due to geopolitical problems, but message is still one of be prudent in ones affairs.
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Why hike again? If hike inflation never come down. Only purchasing power of consumer will come down. They buy 1 piece instead of 2 because corporates will pay this to consumers. So demand will be less it will affect their sales, purchase, new recruit , profit and finally share market when they announce qtrly result
Quoting foto
{quote} Message from both Powell and now Lagarde to firms is bailouts not such a sure thing. De-Risk or go bust. Firms have risk management and that would address exposure which in turn affects allocation models. Will take couple days to see if there would be impact. Can not pay alimony and private schools without a Firm behind it all. Today a different message coming from CB heads. Might again be due to geopolitical problems, but message is still one of be prudent in ones affairs.
For me the de risk will come after some high profile busts, not before.

Risk managers have never use the fed put to grant portfolio managers larger trading limits... so I don't follow your argument.
Quoting ww3361
{quote} For me the de risk will come after some high profile busts, not before. Risk managers have never use the fed put to grant portfolio managers larger trading limits... so I don't follow your argument.
Will flesh the idea out and keep it simple.
The reason CB's choose such an arbitrary number like 2% inflation as an inflation target mandate has to do with the rate of devaluation of a currency. 2% devalues at a pace that allows an populous to adjust and supports the whole premise of debt based growth.
After all if a person or entity takes on Debt and has to pay principle back in full with real money plus interest they would be less likely to mortgage out their lives. However if taking on debt means paying it back in the future with a devalued currency then the sting of borrowing is reduced.

Moving future consumption to the present is the very basis of a consumer driven economy. Buy now pay later. Monetary policy can be promoting this concept or go restrictive such as current period we are in.
All the talk of a neutral rate is that balance point between moving future consumption to the current via debt assumption or putting the brakes on where interest rates have a real cost.

Now my thoughts are that financial market participants have been bucking for a change in inflation target to 3%. That in turn would allow financial markets to leverage out and make hay while the Sun shines. Its' been going on for some time and assets leveraged out have produced fantastic returns without having to produce any real wealth. Getting rich via ownership without having a product to sell.

Problem is Fed and ECB keep saying they are sticking with 2%. So why is that?
Well for starters as everyone is aware Populist movements are rising across the globe. People who have been excluded from financial markets which is most of the working poor, living hand to mouth have had enough.
The song Rich men north of Richmond as theme is aimed squarely at the leveraged out financial sector and its adherents all throughout government. People are disenfranchised and starting to get to point where they are going to change the economic model that applies to them in such a negative fashion.
Dumping a materialist lifestyle and getting back to keeping more of what is earned by the use of hands comes to mind as a real alternative to current landfill economy. Buy it, use it for a little while, throw it away, is not a sustainable model.

I think CB's are starting to understand they themselves are directly responsible for the wealth inequality that is here and now as fact. They are starting to understand this if not changed is going to result in massive social unrest or a collapse of the debt based economic model.

Working people are lowest on the gains made via economic financialization, coupled with most hurt by inflation as they live a hand to mouth existence. To avert this scenario as outcome 2% becomes the desired inflation rate or so cb's believe.

Financial markets which are all about using leverage to acquire assets then pay it off with a devalued currency must be cognizant of how much debt is too much. There is a big difference in Math between 2% and 3%. Over leverage leads to a margin call.

Thus my original point returns that all the Financial institutions base their risk management upon how much they gain vs how much leverage deployed. If 3% were the standard for currency devaluation then taking on more leverage makes sense. But if 2% is used then Risk exposure would be less so as not to end up like Credit Suisse, Lehman etc.

We should be entering a time period of deleveraging Risk for the near future as inflation gets reduced to 2% model from where it is now.. That implies a rearranging for institutional portfolios in markets, which affects trades placed.

This makes sense to me but does not mean rationality will triumph in markets.
Would add one more thought. Let's say Fed is giving a party to kick off recovery from a slump.
Invites go out, free booze and food to be had at Eccles bldg. Come as you are.
Upon arrival a drink is there on a platter at entry. Alongside of that platter a note. open Bar in rear room, no limits.

That is Fed Put accompanying MMT, What are the invitees supposed to do other then take the offer and indulge. Did someone twist an arm to force overleverage. Not at face value. But when the party gets going does anyone step up and set a limit. No it becomes a free for all as well intended but not spoken by Fed.

Fed can play the game of we are innocent, but are they really?
Quoting foto
Would add one more thought. Let's say Fed is giving a party to kick off recovery from a slump. Invites go out, free booze and food to be had at Eccles bldg. Come as you are. Upon arrival a drink is there on a platter at entry. Alongside of that platter a note. open Bar in rear room, no limits. That is Fed Put accompanying MMT, What are the invitees supposed to do other then take the offer and indulge. Did someone twist an arm to force overleverage. Not at face value. But when the party gets going does anyone step up and set a limit. No it becomes...
But you have to connect your essay to price discovery.

One is rational and the other isn’t.
Quoting ww3361
{quote} But you have to connect your essay to price discovery. One is rational and the other isn’t.

What I outline is the economic surround for a market based upon what was just gone through this week past.
The biggest question I ask before a trade gets placed is this a trade based upon Risk on or Risk off. Unless one trades fully hedged which is another group of problems, in General a trade is placed as directional. In other words if one is short and market goes with that trade then cash goes positive.

If environment projected is risk off then I will go to USD or short JPY carry depending upon how powerful a situation presents itself. That's a way to choose what vehicle to trade in first place.
Price action as it ensues either confirms that trade is doing as expected or it is not doing as expected. That goes into heading of trade management. I use price discovery for confirmation not because it is some formula based upon Bar count or some such.
I trade levels where possible and will fade spikes if underlying scenario suggests that is right thing to do.
We look for risk/reward ratios that are worth putting on a trade for. Just trading price discovery/price action is insufficient in my opinion.
Trade management includes trailing stops and exits if things are looking poorly even if going where expected directionally. If a strong move is expected and it fails to materialize I will reduce position size or get out.

Everyone trades different and has to find what works for themselves. It was a Big macro fundamental week just past. Market moving in my thinking for several weeks ahead. I have outlined some thought on why that was so. This way I have some thought behind what am expecting or anticipating to be a market with some direction and not a sideways moving market. I will let a trade run as consequence and see if a bigger gain is possible.
I do not do scalping, rarely day trade but prefer swing or position trades.
Quoting foto
{quote} What I outline is the economic surround.
And there was me thinking the economics behind targeted inflation was really simple:

A-Some inflation is the surrogate marker for there being sufficient cash finding investment... Investment is the cornerstone of employment and a growing economy.

B-Too much inflation takes on a life of its own....second round effects....price spirals.... kills stability, kills economies.

The dance for the central banker (and politician) is to maximise A whilst minimising B.

That's it!

All inflation is bad... but some is a good sign. Deflation won't pay for the old. The non-linear and very independent nature of inflation requires upmost prudence by the central banker. A central banker must never lose credibility as to minimise B. They can, of course, do this by lying: Say they are doing one thing, but really helping to finance government debt. Even by manipulating the very inflation figures themselves. They can NOT change their inflation target mandate as that would compromise the minimising B goal and in turn solicit the non-linear forces of the inflation beast: To lose credibility by moving the goal posts is in itself to encourage non-linear price spirals as people will expect more and more inflation in a power law like fashion.

Second round effects of inflation are now entrenched. The Fed have to maintain hawkish rhetoric for the foreseeable (even if they only maintain rates). It will take but a tiny spark to trigger the next round of deleveraging/derisking as everyone knows the amount of leverage in the system can not be sustained once these higher rates hit more home/business owners/speculators.

In the meantime.... none of this is new. Until something kicks off..... sit on your hands... maybe even buy a little risk. The next time Spoo futures go limit down.... bet on it doing so many more times in quick succession. Until then, save your bullets.
ww3361 you have done a good job with this.
As long as debt based growth remains the model engine producing economic nominal growth CB's are going to intervene.
Their past interventions consistently ended up favoring those who are first in line at the debt window, thus you have enormous distortions in economy benefiting an entity such as Blackrock who buys up available housing and turns people into renters rather then owners.
This is reaching a threshold whereby common people are starting to rethink if they should continue or look for another economic system whereby they retain more of the wealth they produce as workers.
Financial stress evidenced by the rise in populism.

Tamping down inflation damage is the goal of cb's or the whole gyrating debt swirl goes belly up.
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