Eccles Building

18-19 hours before The Fed meeting

Nasdaq has companies “on file,” waiting for better conditions before they tap the public markets. The yields for stocks and bonds are at an inflection point that will make it hard for investors to dive back into riskier assets. The S&P 500’s earnings yield has the smallest premium to IG bond yields since 2010 (Year 3rd after Lehman Brothers/Global Financial Crisis). Entire stock market ecology has a tough time adapting to the end of cheap (even free) money, with cash flow, rather than "valuation" being the central focus. Policy prevented a sharper downturn but the pandemic made the economy hard to mitigate.

Those who entered finance after 2008 Lehman Brothers are, basically, unskilled labor. Since 2008 Lehman Brothers, Low Rates caused hundreds trillion dollars of asset inflation hence unrealized gains. To imagine unrealized: why Elon Musk set a maneuver to (look like) purpose lowered worth of Twitter, no longer high like US$ 44 Billion, if Elon actually has US$ 200 billion assets. 

With chaos in the stock market in China since March 2022 and the last 3 weeks in the U.S., we’re going to speak of a recession in existence at this point. The offset is how long it takes the Fed to capitulate and turn dovish to reverse the recession. Persistent failure to regain control of the inflation narrative is turning the perception of the Fed that lacks credibility and inadvertently contributes to undue global financial volatility.

European Central Bank credit is now weakening more than US credit. Has the last ECB meeting put significant doubt in Quantitative Easing support and or created fear about fragmentation being political & messy? This (high inflation, conundrum stocks market, impact because of the Russia - Ukraine war) actually to be prevented when Biden was in Europe 2 months ago when met several NATO leaders like Scholz, Macron, Draghi?

Financial sanctions on Russia since the war started (February 24th) won’t necessarily hurt the global importance of the US Dollar and the Euro, according to the European Central Bank. Some Biden high-rank concern that rather than dissuade the Kremlin as intended, US sanctions have instead exacerbated inflation, worsened food insecurity and punished ordinary Russians more than Putin or his allies (Saudi—-because oil; Iran—because oil & gas too; Angola—-same like Saudi & Iran). Biden high-rank underestimated the amount of self-sanctioning companies would do, a fact that’s contributing to inflation, how to squeeze Russia given that sanctions since February (war started) don't seem to have changed Putin's strategic calculus so far.

Then, amid waiting The Fed meeting, Corporate Bond buying is getting popular again (for now).

High inflation, turmoil crisis in Tech sector worldwide, crash of (all) Bitcoin - Cryptocurrency, likely to lead Federal Reserve officials to consider surprising markets with a larger-than-expected 0.75-percentage-point interest-rate increase at their meeting. Former Chairman The Fed, Ben Bernanke, doesn’t think Bitcoin would take over “as an alternative global currency. Gold has underlying use value. The underlying use value of a Bitcoin is to do ransomware or something like that, added Bernanke.

The recent extreme moves by the Fed were both unusual and entirely predictable. The long-anticipated bear market is finally here. Hopefully after Jerome Powell (Governor The Fed) met Biden last May, Powell chose a wise option about rate, amid market crumbling.