Valuations in relation to interest rates are some of the highest in history . Tech CO’s simply laid off 100’s of thousands to goose earnings . Powell keep raising till asset prices and inflation contract . If fed stops asset prices rocket much more . Homelessness will sweep the nation as nobody can afford shelter .
Fed has a duty to maximum employment and price stability. That's it. All the rest that people want is just them whining.
That has been my fear for quite some years. Imo, housing costs can destroy nations, it could turn the West upsidedown. It could create civil mayhem. Western governments are complicit in the destruction of society via their greedy self interest. In Australia, the government want to get involved in building nuclear submarines when they are incapable of even building simple things such as housing. Absolutely pathetic thinking, priorities all wrong.
The Fed has been creating larger bubbles & inflation. The Fed of old used to take away the punch bowel when the party was getting out of control. Now they chug down the punch bowel than they spike it with heroin to keep the frenzied gambling party of debauchery going on full tilt.
Yeah it seems like since the recession of the early 1990s, the US just relies on bubble after bubble to "create" wealth. Internet, Real Estate, Bond Market and AI. Its the downside of exporting all your industries to the 3rd World. Financialization of industries. I still believe that the nVidia earnings report in May was a cataclysmic event on par with the Netscape IPO in 1996. AI is the new dot com.
If you read Mike Wilson's memo, and others, the market (rich people) is doing the P/E expansion while companies' EPS is in contraction, not the Fed or any agency. The alternative is buy DIP on T Notes and Bond futures since the expection for the rate cut is real this time. You are in the market, there are always things to trade to counter the cycle.
Shelter is in a state supply shortage. Additional supply of housing won't get built as long as interest rates are high and the investment for development isn't justified. Nobody is willing to sell their existing home and signup for a 2x higher mortgage rate in a new home. The key to lower housing prices is to have lower interest rates. If he keeps hiking it's going to go down as one of the most epic policy mistakes of all time.
That's what happens when you hand so much power to entitled accountants in suits who in real life wouldn't even know how to change a light bulb.
What you say is 100% true but, realistically, nothing's gonna change from the status quo. It's always been this way.
The fed's job is to blow up the market while acting hawkish. Inflating things has been their plan since 2009. A trader told me from back then and i blew it off because he was struggling although experienced. And I had a belief the market was free.