Let me translate the latest Fed statement for you: "we will keep the money printer running hot indefinitely". I think they were deliberately vague when they put in their guiding objectives: 1) min 2% inflation (a floor NOT a target) and 2) maximum inclusive employment (wtf???).
This should have been interpreted as the ultimate loose monetary policy pledge yet the Nasdaq and S&P sold off. Why? Secondly people are still questioning the US's ability to achieve inflation. Seriously? China is growing mid single digits pulling most of Asia along with it while the US$ is starting a structural decline and you think inflation won't be imported? Goods prices will continue to rise while Services inflation will return once the covid-19 situation stabilises and people start heading out again. It seems silly to worry the average American will suddenly become Asian and maintain a high savings rate, especially when there is so much available credit flooding the market. Lastly on Energy, the market doubts demand will ever recover but they forget that supply has been through the ultimate crucible: bankruptcies, mass capex cuts, credit market freeze. People shouldn't be taking their cues from traders but rather from history: this is similar to iron ore and commodities during the 90s and the story/trigger for an eventual cyclical recovery/boom just isn't obvious right now. Energy is a likely source of future inflation and headaches. Guess what happens to interest rates then? Last minute forced policy is always one of lesser evils...
Various bubble will continue building and one would be wise to prepare for the eventual consequences and opportunities today.
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