15Jun11:03 amEST

This is the Business We've Chosen

It seems foolish to spend days awaiting the decisions and nuanced, confused rhetoric of a bunch of academic bureaucrats who are trying to solve the very serious problems they had a major hand in creating in the first place.  

But this is the business we've chosen. 

Unless and until we arrive at a moment when markets across several asset classes (equities, Treasuries, gold) begin to revolt against The Fed and cease showing The Fed deference, we are beholden to days like today where much is riding on exactly how many basis points The Fed raises rates, coupled the accompanying statement and then the wildcard with Powell's presser, all of which kicks off at 2pm EST later today. 

As it stands now, there seems to be a hearty contingent of traders expecting a wild relief rally later today, mostly due to "oversold" conditions. But just as bull markets continually probe the outer edges of overbought conditions, so too can bear markets put the entire notion of oversold conditions to the test.

Whichever avenue The Fed chooses to take later today, I view the events of this week as a blow to The Fed's dwindling credibility and gravitas. After all, Powell was adamant as the last FOMC presser that The Fed was not actively considering 75 basis points. This, after quarters on end of defiantly and smugly calling inflation transitory. In reality, The Fed is so far behind the inflation curve that they could raise by 400 basis points today and it still may not help as much as some think--I am just using that number as an example of how foolish it is to debate whether 50 versus 75 is some kind of watershed moment for Powell. 

When we eventually cross the point of no return with Fed credibility, a bond market crash and an epic spike in gold likely awaits. 

Until then, it remains to be seen later today if the global markets are going to keep playing softball with a confused, meek, spineless Fed. 

Dead Ahead of The Fed Stock Market Recap 06/15/22 ...

 
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