11/07/23 Bear Market is in the Making

The Fed says that it may stop greasing the pole if the economy has stopped producing climbing inflation. The Fed formulated what was the sharpest interest rate hike ever in response to missing the pandemic/fiscally stimulated inflation signals that preceded it. The abruptness and severity of interest rate hikes was necessary to get every one’s attention that they were serious about quelling inflation. I think that they have done that but now have to remain convincing that they will not relent by allowing rates to slide back too quickly. They have brought inflation back down but doubt they have yet fully driven a stake through the heart of inflation expectations. To do that they will need to leave rates high so that you cannot borrow money and clear a profit investing because of inflation. Fed Chairman Jerome Powell suggested that rates were high enough to pull inflation down to the Fed’s 2% target but also warned that they would raise them again if that proved not to be the case. They will remain diligent in fighting inflation. They appear to believe that quelling inflation is more important than economic growth. Savings interest rates are now higher than the rate of…