re: Let's talk the Federal Reserve a little further

trumps biggest asset in liberal minds is the economy, their path to victory, in their minds, is to create a long lasting recession leading up to 2020 so trump supporters abandon him or just stay home and dont vote.

its right out of their rules for radicals bible

that said, i dont think it works as trump supporters arent stupid and will rightfully blame the fed and not trump for the recession they "manufactured"

in the long run it will be a good thing when they use up all their ammo, you can only raise rates so high and then you have no more power to hurt the economy and anything you do, or dont do after that will boost the economy like crazy

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Wasn't this rate hike already expected and baked into the market? Then why did the market move down on the news?

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yes it was announced at the last hike but everyone hoped they would not do it since its only being done for political reasons and not based on monetary policy.

what screwed the market was when they announced they are doing 3 more rate increases after this one. they basically said we are going to force a recession just because orange man bad.

never before has the fed dared to openly signal its intent to screw up the economy in order to use its power to be a political weapon

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Now we have the reverse scenario this past year with rising interest rates and the same people have been dumping equities and moving to treasuries, cash, and short term bonds.

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Except the 2 year, 10 year, and 30 year treasuries are well of their highs, and the are all below 3%.

And it makes no sense to crash stocks, which have a far higher return and a far greater ceiling (and floor), for bonds.

Over the last 25 years, a large cap 60/40, growth/value portfolio, has an annualized return of 9.64% while the total bond market portfolio has an annualized return of 4.84% and only 2 years (1995 and 2000) where it outperformed the 9.64% of the stock portfolio. And bonds have gotten progressively worse returns, as the last 15 years they only grew by 3.87%.

So why would someone crash a more risky investment with high growth potential so they could invest in a less risky investment with far less growth potential?

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It’s not that John Q Public can’t play the game too but the insiders are first to feed at the Fed Money trough.

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They could do it with stocks, but there isn’t much a game to manipulate with bonds, especially since they have a limited ceiling to raise rates. Bonds are useful for limiting risk, not maximizing growth.

You don’t see the Carl Icahns of the world the amassing billions in the bond markets. And if anything they would be shorting the market if they wanted to play the game. But even that doesn’t make much sense, since there is a much more risk. And neither makes sense if they are trying to manipulate the market since a strong bull market can maximize risk adjusted returns.

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Now we have the reverse scenario this past year with rising interest rates and the same people have been dumping equities and moving to treasuries, cash, and short term bonds.





Except the 2 year, 10 year, and 30 year treasuries are well of their highs, and the are all below 3%. And it makes no sense to crash stocks, which have a far higher return and a far greater ceiling (and floor), for bonds. Over the last 25 years, a large cap 60/40, growth/value portfolio, has an annualized return of 9.64% while the total bond market portfolio has an annualized return of 4.84% and only 2 years (1995 and 2000) where it outperformed the 9.64% of the stock portfolio. And bonds have gotten progressively worse returns, as the last 15 years they only grew by 3.87%. So why would someone crash a more risky investment with high growth potential so they could invest in a less risky investment with far less growth potential?

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It's all about riding the wave and getting off before it crashes. If you're a retiree who was forced into equities due to ZIRP and now interest rates are rising you want to lock in those equity returns you've enjoyed the past 10 years. Many have turned defensive and if the markets crash they'll have the option of buying back in on the cheap. This isn't a novel approach. Most folks who are still in accumulation phase should continue to dollar cost average. People who've reached critical mass are going defensive baw!

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Sure. No disagreement regarding that. But that’s a lot different than the Fed than the Fed trying to manipulate the market to maximize the wealth of its stakeholders.

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My point was the investment/institutional banks and other businesses tied to banking have a decent grapevine to future Fed policy. That pre-street knowledge is significant when you’re moving billions of dollars around in the markets.

I have come to the conclusion that they are deliberately attempting to cause a depression to discredit economic and political nationalism / the MAGA agenda.