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The Fed delivered a message to the stock market


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#1 pdx5

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Posted 07 January 2023 - 11:53 AM

The Fed delivered a message to the stock market: Big rallies will prolong pain

 

It was a “don’t make me come back there” moment from the Federal Reserve.

A line from the minutes of the central bank’s December policy meeting released Wednesday afternoon was taken by analysts and economists as a warning to financial market participants that bets on a policy pivot in 2023 aren’t welcome. And, to the extent that equity rallies and other financial market developments loosen overall financial conditions, those wagers will only force the Fed’s policy-setting Federal Open Market Committee to prolong the pain necessary to bring down inflation.

The Fed delivered a message to the stock market: Big rallies will prolong pain - MarketWatch

 


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#2 qqqqtrdr

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Posted 09 January 2023 - 04:26 PM

This can go on for awhile.    Rate hikes will squelch house buying and car buying significantly but not as much on groceries, etc...   So usually rate hikes control 40 - 60% of effectiveness to lower demand inflationary products.   With the shortages of material and supplies due to Covid, Ukraine war rate hike effectiveness is 25 - 30%, which means the rate hikes need to be more significant to have any affect.   Increasing supply of product would have the most effect, but it takes time for those imbalances to work through the system.   Right now it is eggs, milk, and sugar that is high inflation.   This should resolve lower by May, but it has little to do with the Feds raising rates.