by DeltaHedgeDN
The Fed is saying all of the same things they were saying over 15 years ago. The Fed chair at the time, Ben Bernanke, told lawmakers that the U.S. economy did not appear headed for recession. ” Our assessment is for slower growth, but positive growth, going into next year.”
Powell at the last FOMC press conference “my base case is slower growth, but that there will be positive growth this year. My forecast and that of my colleagues as you will see from the SEP, it’s a forecast of slower growth, some softening in labor market conditions, and inflation moving down steadily but not quickly.”
Loretta Mester last week: “I expect growth to slow, but still positive. I do not expect a recession.”
Patrick Harker last week: “Growth will be slow but I do not expect a recession. I am not forecasting a recession.”
Thomas Barkin last week: “Growth is slowing, but will remain positive. Data continues to point to no recession.”
Neel Kashkari two weeks ago: “A recession is not in my forecast. I expect growth to slow but remain positive.”
Raphael Bostic two weeks ago: “We have a good chance of avoiding a recession.”
John Williams on Jan 19: “I expect slower growth around of around 1% of this year. I do not forecast a recession.”
Lael Brainard on Jan 19: “Data points to slower growth in the future. Recent data indicates slightly better chances of avoiding a recession. I do not expect a recession.”
James Bullard on Jan 2: ” I still think we’ll have below trend growth. I anticipate slow growth. The likelihood of a soft landing has increased. I do not forecast a recession.”
You get the point. It’s goddamn deja vu up in here. How quickly the markets forget..
The Fed’s near-term forward spread, the yield spread that the Fed views as a leading indicator, has dramatically inverted. JPow has been quoted many times saying this is the yield curve they’re watching, and if it inverts they will have to cut rates because they’re in a recession. On March 21, 2022, JPow says “Frankly, there’s good research by staff in the Federal Reserve system that really says to look at the short — the first 18 months — of the yield curve. That’s really what has 100% of the explanatory power of the yield curve. It make sense. Because if it’s inverted, that means the Fed’s going to cut, which means the economy is weak.” Here’s the paper they wrote about the near-term forward spread www.federalreserve.gov/econres/feds/files/2018055pap.pdf
Here’s what the near-term forward spread currently looks like
The curve is currently forecasting >90% recession risk
Who gives a f*ck though right? Stonks go up?
“History doesn’t repeat itself but it often rhymes.” -Mark Twain
If there’s one thing we’ve learned over the years – Fed officials are much like the pilot on the airplane with engine trouble. Above all, they want the fannies in the seats. As credit risk and deterioration is on the rise, the last thing they want to do is fuel the fire. But make no mistake. You’re f*cked.
Everything is fine …… 🔥 🔥 🔥
How much more pain can the economy handle before the Fed stops strangling the housing market? pic.twitter.com/EWZr6MNnyd
— Wall Street Silver (@WallStreetSilv) February 22, 2023