I have a change.
Usually The Fed Gets It Wrong
I pointed out many times over the last few years how the Fed got it wrong. Most recently I pointed out to subscribers that when Powell floated raising by 50 at a Congressional testimony, banks fell like dominos.
That was a period of a few weeks he waffled between no hike and 50 several times back and forth and it hurt markets and banks.
Previously I pointed out to subscribers that inflation would spike when Powell was calling it transitory. I predicted he'd change and raise hard and it would hit markets. That happened.
I pointed out when Kashkari took on the market in a game of chicken but lost. The CME ended up being more right that they'd slow, pause and maybe even cut. The Fed usually gets it wrong.
But Now The Fed May Have Got It Right
But after thinking about it, the Fed may have hit a once-in-a-long-time sweetspot maybe actually getting it right now.
It took a while for Powell to admit that rents lagged in CPI but he recently admitted to that too. That slowed down his hawkishness. His causing bank failures slowed him down too.
He pointed out last week that rents were a whopping 1/3-1/2 of CPI and PCE. Wow. Imagine 1/3-1/2 of a key measure when he didn't admit there was a lag anomaly in there? The leader of the free world's money. Oh my, right?
But he came to and now admits it, TG.
Well if CPI's stalled at .4s core for about six months and rents are about to slow it, guess what? We have visibility that the Fed is done or near done.
Powell sees that.
He's had a moment of clarity.
I've also pointed out that this economy has held up way better than any bear would'a thunk (nothing wrong with that sentence). The reason I think is that you have a once-in-a-lifetime back-to-normal post-pandemic that is throwing everybody off. That is a major major driving force offsetting any bearish historical models.
So you have a major driving force holding up the economy and you have a Fed that at least for now, may have hit a sweetspot of actually getting it right.
Inflation slowing. Economy holding....
Guess what? This Fed may have soft landed this thing.
The market's smarter than everybody. The market sees something and we've been bullish this year. Well now, I think the market and its bears and shorties need to soon admit the Fed may have soft landed this thing.
How nice would that be?
That would mean hikes are done or near done and growth can shine through.
I think Q3 EPS can grow off of last year's tough Q3 and there's the ingredients for bears-turned-bull to start having bull-market-fairies dancing in their dreams.
Consider.
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