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Dollar down... .25% vs Euro, .5% vs Yen, .6% vs GBP Bitcoin kneecapped on its way back from the bar last night... fell straight down 3.7%, not getting back up...
Oil kneecapped too, on a fake news story re
AI stock is up 27% on the day...
ZH doom porn continues per usual... and not without reason...
Inflation is re-accelerating, surprising some... Recession, "they" say... should be fully enveloping by June... even under the "cooked" math models Powell tells Congress "ongoing rate hikes needed"... So, let's all buy stonks ?
I think "wait for it"... Expect we're not near a bottom... more given the excess in exuberance apparent today... "not a bottom"... with the market taking Fed speak as dovish...
Still too early for that... profits in decline, layoffs soaring... debt tie-ups exposed up are NOT being papered over now. Auto loans the worst, now... will continue getting worse fast as consumers deal with rising rates, still accelerating inflation, lagging wages, and huge corporate layoffs...
Also, the moribund but debt laden zombie companies are finding their fall now has ropes suddenly tightening nooses. It is not at all clear that the Fed is, or is capable of, "soft landing" anything... or even paying attention to the risks in the "cooked numbers" vs pace of change problems in multiple moving parts... including the "market impacts"... in real people's experience, conditioning their participation vs "managed" stock market pricing...
That combines to leave significant space for realizing "unintended consequences"... perhaps occurring in eruption episodes beginning far outside their modeling... contagion from bad debt ( the same issue they invented QE to paper over) being one of those issues in which cascading effects might emerge chaotically... suddenly gutting consumers, and businesses... as rate issues... outside the Fed's direct span of control... might have "real" rates expand spreads to account for increasing repayment risk... rather than "playing nice" in sustaining typical spreads... if the "real" economy behaves in unexpected ways... as often occurs when a long held error in expectation suddenly corrects.
The problem is... not only "what does happen" if you succeed in "crushing" consumers, jobs, and growth... as that might not 'fix" the inflation problem the way they expect... rather than just making everything else worse ? And, as they've been wrong about that inflation thing all along... why think they're right now ?
On the Fed's link... look at the slope in the ramp in the rates rising... which they've done because "inflation is temporary" was wrong... so the pace in the ramp in rates we see is "unprecedented". That means the guys that got it badly wrong on inflation are now trying to "fix it" by over-correcting for their prior mistake... and are making decisions now while having no real idea what the impacts are of the pairing in "prior errors," first in the miss in undercorrecting, being addressed now by compensating in "overcorrection". What does that mean we should expect now ? Who knows... as there's not been enough time (6 to 8 months... perhaps more in an already slow economy) for that sudden impact to work through the economy. And, how does that interact with... oil prices... and inflation continuing, accelerating again... in spite of the "unprecedented" pace of rate increases... while at the same time, the "cooked numbers" on growth, recession, and everything else... make navigating much harder... as "cooked" inputs interact in unknown ways... causing blindness ?
The issue is not hard to understand... but "perfectly simple" as shown here in describing the effects of "understeering and oversteering" in driving... the Fed similarly having to work in context of a huge number of variables... only while apparently having no idea how the accelerator, the brake, or the steering work... and perhaps being wrong about... the function of the tires, what the road surface is, wet or dry, hot or cold, designed and sloped for turns at what speed... and... is there reduced visibility or ice in the forecast ?
You might look at that above and wonder... what's the Fed equivalent of "a wet road" or "black ice" ? But, really, all you need to understand is... the Fed equivalent of a "bad driver"... given entry to the curve at a high rate of speed... while almost missing the turn entirely... and then making an "unprecedented" correction... either in "steering"... or "slamming on the brakes"... or both ? What a lot of people in the market are expecting now... given the proof in hand in the Fed already dramatically "understeering" into the inflation... in denial and REALLY slow to recognize it... is that what you see them doing now in "compensating" for that "miss" in understeering... with the "unprecedented" spike in rates... is over-steering ...
The example is a good one... as the problem is induced by "going too fast" and "not paying attention" and then initially over-correcting... exactly where we are now in the Fed's reaction cycle... only, not yet clear whether the Fed will "get lucky" and miss both all the other cars... and all the giant concrete pillars ? Where's a cop when you need one ?
=========================== Ukraine - of mice, mouse traps, and stinky cheese...
Every military adviser with a brain told Zelenski to not take the Russians bait in Bakmuht... as it had no strategic value. He ignored that, made it "strategic" as the "psychologically important" hill for Ukraine to die on... Noted he had second thoughts two days ago... talked about withdrawing to save the force... And, that's NOT happening today... as, all the bridges blown.
Ukraine's forces are now apparently trapped in the city, encircled... Looks like either Ukraine surrenders the mass of their force to avoid a bloodbath, as Russia asks... or, there's a bloodbath... or... ? Ukraine has been in similar circumstances already in this war... and, now it appears likely that a need for "rescue operations" could prevent the "planned retaking" of Crimea... or, whatever else it was they were planning to do instead of digging out of a hole... that they never should have dug their way into.
