You'll Get Over It, Baby

Many moons ago I was sitting at a limit hold 'em poker table at the Harrah's Casino in the French Quarter, down in New Orleans. 

An elderly, frail man with a trachea voice box was gambling it up and playing every single hand, the hallmark of a reckless long-term losing player in poker. Of course, anything can happen on any given night in poker, which is part of the allure for players like that, especially--You can innocently be sitting at the same table as them, waiting for your premium starting hands and/or playing your position correctly only to get snapped off by their dumb luck. In essence, this is the main difference between poker and chess, which is also why poker can be profitable over the long run. 

In one particular hand, the gambler above was holding 2-6, off suit, easily one of the very worst starting ends in Texas hold em, and beat a man holding pocket Kings on a board where he actually hit a third King to make a "Set," an incredibly powerful hand. But the gambler made a straight to beat the set. 

The man holding the losing hand threw his pocket Kings across the table at the gambler, practically aiming for his voice box. Both men had distinct New Orleans' accents. 

"A goddamned maniac playing deuce-six off suit! You won't make it past Christmas this year with the way you live and play! You goddamned maniac!

The gambler simply gave a gleeful smirk and stacked his won chips, mumbling something as he pressed his voice box. 

"What the hell are you trying to say over there, if you even can?!"

"I said, 'You'l get over it, baby!'"

"Goddamned maniac!"

"You'll get it over it, baby!"

For reference, part of the New Orleans colloquialisms is that grown men often call each other, "baby" as a kind of overly-familiar greeting. 

I was reminded of that story this morning seeing the plethora of calls from market players, pundits, fund managers, CNBC commentators alike virtually all calling for The Fed to either immediately pivot to a dovish stance or for Powell to hike his 75 bps on Wednesday but then to announce a pause from future rate hikes.

Frankly, either scenario would be beyond shocking at this point. Powell scrapped his original Jackson Hole speech in favor of a much more brief and direct one where he made it crystal clear that The Fed was now solely focused on historically high inflation.

For him to back off or change course now, especially after the recent hot CPI print, would be the sort of blunder he knows could land him in infamy. And after becoming a wealthy man himself and also being seen as a savior of the world after the pandemic, the last thing Powell wants to be remembered as is the man who got destroyed by inflation. 

With rents, groceries, electricity, and wage growth all remaining sticky high even with falling gas prices, I fully expect Powell to remain much more hawkish than the market expects going forward. 

Bulls will eventually need to accept this new Fed path, albeit likely by accepting a whole lot of pain first. 

But they'll get over it eventually, baby.