A face of question marks

Once again, the Federal Reserve conjured up its “biggest” rate hike in 28 years:

A rate hike of 75 basis points

However, this “trick” has been guessed and seen through by the public in advance.

And just like that, the Fed funds rate —

Timid, reluctant, posturing, pretending to come to the 1.5-1.75% range

Why did I use all those adjectives?

Look at what Powell says, the way you talk to him!

In his speech, Powell acknowledged:

“Inflation levels remain elevated, reflecting the supply-demand imbalance associated with the pandemic, higher energy prices and broader price pressures.”

It is easy to blame inflation on the imbalance between supply and demand

It’s really not our fault, its Russia and China’s:

Russia’s invasion of Ukraine is causing enormous humanitarian and economic hardship, and the invasion and related events are putting additional upward pressure on inflation and are likely to have an impact on economic activity. In addition, the containment of the outbreak in China could exacerbate disruptions to supply chains.

From the Biden administration to the Powell Fed, no one has been more professional.

Powell went on to say,

The Committee will continue to monitor the impact of incoming information on the economic outlook and will be prepared to adjust the stance of monetary policy as appropriate should risks arise that could impede the achievement of the Committee’s objectives.

What does that mean?

To tell the market that this 75 basis point rate hike was temporary and forced, and that we will be more compliant and silky when the market comes to rape us again.

Why am I being so mean?

Just because Powell said at the last meeting that a 75 basis point rate hike was not on the table and now because last week’s inflation data changed from 8.3 per cent to 8.6 per cent, he is playing along with market expectations, taking last month’s statement as a fart and choosing a 75 basis point rate hike.

Professional hit the face, clap ring ah!

As for how inflation is playing out in the United States, in yesterday’s post, “When Will Inflation goes down?” Already said, whether the Fed raises rates more or less —

Between now and the end of 2022, U.S. inflation depends on what happens to oil prices;

Towards the middle of next year, towards the end of next year, inflation in the US is bound to fall sharply.

To illustrate this, I have included a chart showing the performance of crude oil prices and U.S. inflation during the last round of stagflation, making it clear that crude oil was the engine and leader of U.S. inflation.

What I want to emphasize is that in recent press conferences, I have found that Powell’s speech is more and more like that of the Chinese leadership. No matter what the current economic situation is like and no matter how turbulent the financial market is he will seriously tell everyone:

The current US economic situation is stable and improving.

This time, of course, is no exception. Before raising interest rates by 75 basis points, Powell first stressed that the current US economy, compared with the decline in the first quarter, seems to have started to pick up, but in recent months, the market demand is strong, the job growth is solid, and the unemployment rate remains at a record low. What is missing is “strong leadership” and “steady progress”.

Alas, the Fed has lowered its 2022-2024 economic growth forecast (see chart below) when the economy has already rebounded and is steadily improving. Are you insane?

What’s more, in the face of inflation as severe as we have not seen in 40 years, Powell is extremely confident in the direction of the economy and monetary policy, and he insists that the US economy will have a soft landing.

With stable economic growth, a 2% inflation target and historically low unemployment, Mr. Powell, why don’t you get your head up?

For some reason, I always feel that Powell’s view of the US economy is very similar to that of Chinese economist Justin You Lin on the Chinese economy. No matter what the market is doing, he is always enigmatically confident.

What did Chinese stand-up comedian Yang Li say?

Looking at Powell’s speech, you feel, contradictory at any time, everywhere in chaos, make people full of question marks, I would like to pull Boa Gee to ask him, what do you mean by this sentence, what do you mean by this sentence, what is the matter with the contradiction between this sentence and that sentence, you said that before, now say this, forecast is another way, you this is insane or professional not ah?

Alan Greenspan, who served as chairman of the Federal Reserve for 20 years, famously said:

“If you think you understand what I’m saying, you must have misunderstood me.”

Did Mr. Powell think he was paying homage to Mr. Greenspan with this logically-confused speech?

Greenspan could at least pretend to be a god and scare the markets into a daze with a mysterious smile. But Powell? It always looks like a poker face, but the reporter to a sharper question, his eyes dodge, eyes free, through the glasses frame to see the response, again and again to help the glasses frame…

In psychology, what kind of behavior is that?

No idea! Not confident! What a lie!

Well, here’s a quick summary:

1) The Fed’s interest rate hike is completely temporary. There is no idea of a series of 75 basis points of interest rate hikes, and there is no talk of sticking to 50 basis points of interest rate hikes. Just follow the market’s expectations and I will give you what you want!

2) Regarding the US economy, inflation is caused by Russia and China, our monetary policy is absolutely appropriate, I believe in a soft landing for the US economy, whether you believe it or not, I believe it.

Let’s just joke, watching Powell’s launch —

You might as well read my previous article!

 

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