Wednesday, February 1, 2023

The Fed -- Couldn't Possibly Have Been More Dovish -- February 1, 2023

Most folks did not hear JPow using this word, but he used it more than once. 

Fed rate:

  • up twice more this year unless things get appreciably worse;
  • 25 bp today and 25 bp twice more this year
  • Americans have gotten use to current Fed rate
  • current Fed rate is the new floor for the foreseeable future
  • which means: that another 75 bp increase by end of year is a non-event
  • so many opportunities to be hawkish -- and never took the bait
  • 25 bp in March and then pause and / or one more 25 bp before summer

Jobs:

  • finally seeing some clearing of the "fog" regarding jobs
  • all good news
  • analysts spent too much time on jobs
  • JPow seemed much less concerned about jobs

Covid-19:

  • it's over; get over it

JPow:

  • seems comfortable
  • no longer angry

The only worry:

  • GOP delays raising the debt ceiling
  • the debt ceiling will be raised but the concern is if the government defaults for even one hour -- the message that would send

Dow:

  • down as much as 300 points before JPow spoke
  • now, Dow is up almost 100 points
  • technology stocks leading
  • NASDAQ positive more than 2%
  • investors seem "more with it" than the analysts
  • ignore the analysts; watch the market
  • US dollar "sinking" -- in the current environment -- good to see

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