Fed pushes inflation higher with stealth asset purchases despite purported end of QE; stocks pull back despite key Fed interest rate still at fraction of a percent
“Total capitulation.” That’s Fed speak for “let’s subsidize the grossly bloated stock market even more at the expense of the 99% suffering from inflation.” 4200 (S&P) is not total capitulation. Nor is 4000. Nor is 3000. The fundamentals (price/earnings, price/revenue, price/book, price/free cash flow) justify a number south of that. And many companies are 5-10X overvalued. (There are some undervalued also in this den of gamblers market.) Buffett and Munger nailed it. As you say, the media blames everything but the Fed for inflation. When the Fed is the primary cause. At a minimum, to start to undo the damage the Fed has done, there should be no rollover of Treasuries and MBS. Let them mature. And normalize the Fed rate. That means north of 4%. Somehow these ideas have come to be viewed as radical when, 15 years ago and for all the years prior, they would be considered normal. And ZIRP and QE were considered radical, if not unthinkable because of the highly inflationary effect.
Powell said they are not considering a 75 basis point hike. Who asked him to speak after every Fed meeting? Nobody but JPOW himself.
“Total capitulation.” That’s Fed speak for “let’s subsidize the grossly bloated stock market even more at the expense of the 99% suffering from inflation.” 4200 (S&P) is not total capitulation. Nor is 4000. Nor is 3000. The fundamentals (price/earnings, price/revenue, price/book, price/free cash flow) justify a number south of that. And many companies are 5-10X overvalued. (There are some undervalued also in this den of gamblers market.) Buffett and Munger nailed it. As you say, the media blames everything but the Fed for inflation. When the Fed is the primary cause. At a minimum, to start to undo the damage the Fed has done, there should be no rollover of Treasuries and MBS. Let them mature. And normalize the Fed rate. That means north of 4%. Somehow these ideas have come to be viewed as radical when, 15 years ago and for all the years prior, they would be considered normal. And ZIRP and QE were considered radical, if not unthinkable because of the highly inflationary effect.