Will Sanity Return To Federal Reserve Policy? Maybe!

Market pressure may just be the cause for a pause.  

Speculation abounds about Federal Reserve Policy for interest rate increases. Every expert seems to have a different take on forecasting what the Fed will do to combat inflation. And unlike the Supreme Court, there are no leaks, only published vague hints.

So, is there hope for some sane monetary policy? We may have reason to hope.

Fundstrat has an opinion: The Federal Reserve is starting to realize that inflation is a smaller "black hole of pain" than previously thought, and a pivot or pause on rate hikes could lead stocks to rally more than 16% by the end of the year, according to Fundstrat's head of research Tom Lee.

Read more here for this positive upbeat prediction: The Fed is realizing that inflation is a smaller 'black hole of pain' than previously thought, and stocks could rally 16% by year-end, Fundstrat says (yahoo.com)

Recession Alert! Bloomberg Calls It 100% Certain! Prepare!

Bloomberg has predicted the absolute certainty of a US economic recession in 2023, most likely before October. The economic model may mean the Federal Reserve has gone too far in raising interest rates in their thus far futile attempts to constrain inflation.

No model is certain, just an educated guess disguised as a mathematical projection by experts. Have faith, these experts are not always right. But this one seems pretty dire any way you look at it, especially when we have a flock of other experts parroting similar outlooks. 

Your best bet? Beware and Prepare! The next Fed meeting November 1-2 may give us some direction. 

The stock market is highly volatile right now. Be careful! Watch for a 'risk-off' flight to quality. And CD's are becoming more and more attractive for safety and income. 

Bloomberg: https://www.msn.com/en-us/money/markets/forecast-for-us-recession-within-year-hits-100-in-blow-to-biden/ar-AA133nzh

But be sure of one thing, when the rate hikes stop, there will be a few months of wait and see, then we might just see one great stock buying opportunity.

Future Fed Forecast. Interest Rate, Inflation, Housing, Employment Pedictions

Inflation and Interest Rates are the two main concerns for most working class people taking money out of their pockets, taking food out of their mouths, and too often taking hope out of their lives. 

Will the Fed succeed in bring some relief? Not for quite a while. Expect interest rates to continue to rise for the rest of 2022 and into 2023. Inflation won't be whipped for a couple quarters, unless we get pushed into a deep recession. Housing prices will continue to drop and the unemployment rate slowly rise.  

NerdWallet has some good insights: https://www.nerdwallet.com/article/finance/timeline-for-lower-prices-and-rates

Be aware and prepare! Pay off those high interest rate credit cards, save up some emergency funds, and keep a few bucks on hand, there will be a sale on some quality dividend stocks.  

Will the Fed finally get it right, or are we doomed with a deep recession starting soon?

The only way out is to reverse these interest rate hikes and again began a program of quantitative easing - and do it soon! 

The US Dollar is near the stratosphere and headed higher at a rocket pace. International economic disruption could be just a Fed meeting announcement away. 

Business Insider has it right. Soaring US Dollar to Spark a Fed Pivot, but That's Not Enough for Stocks (businessinsider.com) 

And what you really need to know?

The real rate of inflation.  Alternate Inflation Charts (shadowstats.com)

WSJ: Fed Buying 61 Percent of US Debt

Don't expect interest rates on savings deposits to rise at all over the next several years, or more, if the Fed keeps on buying up the majority of US Treasuries at this rate. And most likely they will, since no one else seems to want them anymore.Julie Crawshaw and Forrest Jones at MoneyNews give us this recap of the original Lawrence Goodman WSJ article here: Federal Reserve Propping up US Economy and presents a dire scenario. In the original article at the WSJ by Goodman Demand for U.S. Debt Is Not Limitless  (Possible Paywall) he makes the point that " Federal Reserve purchases of Treasury debt mask reduced demand for U.S. sovereign obligations." this creates the impression of stronger demand for US debt  and could be especially dangerous.

In consensus, Crawshaw and Jones make the point that the Fed, by propping up the treasury sales, may be delaying action on fiscal responsibility, perhaps even postponing "serious attempts to curb spending and narrow its gaping deficits" by the US Government.

"Without foreign buyers and a shrinking base of U.S. corporate and bank buyers, the Treasury has had to resort to the Federal Reserve itself to make the purchases. The Fed purchasing not only makes up the shortfall, but can keep long term interest rates artificially low."

So for now don't wait for the banks to start offering any reasonable interest rates soon, and look to the market for investments in solid stocks. But take care, the bulls are here for a short term, leading up to the elections. Then pay attention, because the results of this one will determine the financial future of not just this country, but of the world.