Notes From All Over -- "The Fed" Edition -- Bloomsday -- June 16, 2021

Updates

Later, 3:57 p.m. CT: Jay Powell is being seen as very, very dovish. He himself said the Fed will be very accommodating until the economy fully recovers, or something to that effect. 

Later, 3:56 p.m. CT: from social medial (and I agree completely) --

This is wildly bullish for stocks. No asset purchase taper. No head in the sand over inflation. Two hikes by the end of 2023? No blood, folks. And won't ever happen anyway. Game on.

Original Post

The fed, prior to Jay Powell's comments:

• prior to the press conference, at least one talking head suggests first rate increase will be in 2023;
• 10-year Treasury: 1.489%
• slow labor market today means slow change in the 10-year Treasury
• talking heads

Fed announcement:

• unanimous with regard to rates
  
• unemployment:
  
• the Fed sees unemployment at 4.5% in 2021
• the Fed see unemployment at 3.85 in 2022
  
• raises 2021 GDP to 7% from 6.5%; 
• seven official see rates rising in 2022 vs 13 officials see rates rising in 2023
  
• two rate hikes in 2023, versus one rate hike (last quarter, 2022?)
• 3 to 5; 1 to 2
• five members expect one rate hike in 2023
  
• two members expect two rate hikes in 2023
  
• significant increase in short-term inflation
  
• no change in rates (0.00 to 0.25%) or assets purchases
• no change in wording regarding asset purchases
• market drops significantly

Santelli reaction:

• 1.521%
• this is crazy
• Dow drops 300 points simply because 10-year Treasury goes to 1.52 after the Fed meeting

Talking head: "pop" in 10-year Treasury.

• cooler heads: yawn

Me? buying opportunity.

Me?

• the 10-year Treasury: the number to watch -- 1.6%;
  
• most economists consider 4% unemployment as full employment

Me?

• if this "scared" the market this much -- on an incredibly great Fed report -- it just tells me a lot of folks need to get a life.
  

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Taper tantrum: self-fulfilling prophecy. This is really hilarious. All week talking heads have been talking about and writing about a "taper tantrum." The Fed didn't change a thing but yet the media doesn't want to change the "taper tantrum" story -- they love the alliteration and the "shock" headlines. Watch for "taper tantrum" to become the meme for the next week.

Powell: more concerned about jobs than about inflation.

Me? the employment issue will go away by Christmas, 2021.

The Fed, posted during Jay Powell's comments:

• reassuring;
• Covid-19 vaccination rates have slowed;
• will provide advance notice when asset purchases change
  
• questions via Zoom 
• unemployment barriers
• on path to a very, very strong labor market (I strongly agree)
• significant number of folks have retired
• overall a very, very strong labor market
• an interesting wrinkle I had not heard before: 
• the nature of many jobs has changed
• companies did not stop innovating during the 2020 lockdown; the smart companies used the one-year opportunity to their advantage
• how many job openings are in the "delivery business" (DoorDash, HubGrub, etc); how many folks were employed in such jobs prior to the pandemic? 
• how many jobs related to robots have come open?
• how many folks are qualified to work in this sector, per-lockdown vs post-lockdown? 
• you won't get a laid off flight attendant become a jet mechanic;
• you won't get a laid off waiter become a GM battery technician