Powell vs Dirty Hedgies! This Could Go From 0  to 100 Real Quick. How Quick? Answer: Real Quick
Channel: Stock Docta' Trading
Date: 2023-01-13

#powell #fed #inflation #ratehikes #shorts 

I think the Fed may have to actually continue to hike to. Our goal is five and a half or four that don't read. We're calling for a 50 in February. I think the market's a little too optimistic. Extrapolate that this decline in service inflation will continue. Historically, service inflation is very sticky. I would also argue the lags point, you know, the long and variable lag the Fed is looking at data right now and that data on the labor market does not suggest that demand destruction.

You know how forward looking in the Fed be to say that we think this demand destruction will happen in the labor market six months out? I think if you take them at face value, they are saying they're responding to data as it comes in. They are going to be fairly reluctant to, I would even argue, stop hiking, let alone start to cut rates.

So this optimism, why the two years falling, is all these cuts getting priced in? I think that can get taken out as we hear from the Fed, that they can stop it, you know, maybe five and a quarter or five and a half, and then they're going to just stay there for a very long time. I think the market's already looking ahead to when can that easing happen.

I think we'll have to be waiting for quite some time.
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