Focus on Fed Pause

Latest News

2023-06-15

The End of the Fed's Tightening Is Still in Sight

2023-06-15

Why The Fed Has Just One Core Problem After The Rate Skip

2023-06-15

Fed's Powell Appears to See Plenty of Room to Run on Balance Sheet Drawdown

User Discussion

AcidIce

2023-06-15

A whole load of horse crap! The markets are not there to be messed with. If everything is going up only because of cheap loans, of course if interest rates goes up everything will crash down. But now it's stubbornly high meaning everything is still ok until rates goes up higher that will cause a recession, is that necessary or planned?

Why The Fed Has Just One Core Problem After The Rate Skip

Llim

2023-06-15

What the helllll....No shit

runningjames

2023-06-14

FED should rise hike to cool the stubborn inflation further rather than wait and see... They have been seeing that for last 12 months. Pause and likely increase next month will not meet their objective.

A Guide to the Fed's Interest Rate Decision: Pause With Option to Hike

Andrew cub

2023-06-14

Go n eat pranta better

Stocks Are Dangerously Overvalued With More Rate Hikes To Come

Im Kamal

2023-06-13

US economy sinking in tornado force. Raising rate to curb inflation is just a drama. They know as now traditional way in relation ratecut and inflation no longer working. What they do is find a way to strengthen dollar. To the stage, rate hike will halt US economic as whole. Till than 2024

Jerome Powell's Big Problem Just Got Even More Complicated

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The markets are not there to be messed with. If everything is going up only because of cheap loans, of course if interest rates goes up everything will crash down. But now it's stubbornly high meaning everything is still ok until rates goes up higher that will cause a recession, is that necessary or planned?","listText":"A whole load of horse crap! The markets are not there to be messed with. If everything is going up only because of cheap loans, of course if interest rates goes up everything will crash down. But now it's stubbornly high meaning everything is still ok until rates goes up higher that will cause a recession, is that necessary or planned?","text":"A whole load of horse crap! The markets are not there to be messed with. If everything is going up only because of cheap loans, of course if interest rates goes up everything will crash down. But now it's stubbornly high meaning everything is still ok until rates goes up higher that will cause a recession, is that necessary or planned?","images":[],"top":1,"highlighted":2,"essential":1,"paper":1,"likeSize":15,"commentSize":10,"repostSize":0,"link":"https://ttm.financial/post/187465636552824","repostId":"2343999353","repostType":2,"repost":{"id":"2343999353","kind":"highlight","pubTimestamp":1686787329,"share":"https://ttm.financial/m/news/2343999353?lang=&edition=fundamental","pubTime":"2023-06-15 08:02","market":"us","language":"en","title":"Why The Fed Has Just One Core Problem After The Rate Skip","url":"https://stock-news.laohu8.com/highlight/detail?id=2343999353","media":"seekingalpha","summary":"Ahead of the Federal Open Market Committee meeting, markets swooned. When the Fed announced it would","content":"<html><head></head><body><p>Ahead of the Federal Open Market Committee meeting, markets swooned. When the Fed announced it would skip raising interest rates from the June meeting, the S&amp;P 500 (SP500) closed exactly flat. Markets largely anticipated the central bank would break its consecutive strings of rate hikes. However, it did not expect plans for two more rate hikes sometime in the rest of 2023.</p><p>Core inflation is the root of the Fed&#39;s problem. The downward direction since peaking late last year is favorable. The persistently high level is the core problem.</p><h2>Fed Decision</h2><p>The Fed voted unanimously to keep the interest rate paid on reserve balances at 5.15%, effective June 15, 2023. The Fed Funds rate will stay in the target range of 5.0% to 5.25%. In the question and answer session, Fed Chair Jerome Powell said the changed the rate of interest rate increases. This is the natural course for its data-driven policy in achieving price stability at maximum employment.</p><p>The Fed now has a terminal rate of 5.6%. The core price consumption expenditure remains persistently above target. It was 4.7% for much of this year, as shown below.</p><p></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/031acd3f7514d4f0836157e952731165\" tg-width=\"640\" tg-height=\"304\"/></p><p>Trading Economics</p><p>This is above the Fed&#39;s 2.0% inflation target. Until this persistently high rate falls, the central bank needs to raise rates two more times this year.</p><p>The job market may withstand this hawkish policy. Unemployment rose to 3.7%, up from the prior 3.4%. It has room to let unemployment rise to 4.5% this year.</p><h2>No Rate Cuts in 2023</h2><p>Chair Powell said that the FOMC members were unanimous in refraining from cutting rates. Ongoing hopes of a Fed Pivot, or a rate hike, in 2023 are hopeful at best. Treasury yields were mixed. The 6-month (US6M) and 12-month (US12M) yields rose after the meeting.</p><p></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/52ff163fb9d3529f7dc9a2f494a02f41\" tg-width=\"405\" tg-height=\"340\"/></p><p>seekingalpha.com</p><p>The 30-year (US30Y) fell by 1.56% to adjust for expectations of another 50 bps increase this year. If markets expect rates rising no more than 50 bps in the rate hike cycle, it suggests that the 30-year ETF (TLT) will find support at around $102.00. Conservative income investors may wait for the momentum grade to improve from an &#34;F&#34; first.</p><h2>Implications of a 5.6% Terminal Rate</h2><p>Dividend income investors adjusted for the higher rate environment earlier this year. Widely held companies that paid dividends in the 3.0% yield range fell. For example, Johnson &amp; Johnson (JNJ) is down in the year-to-date period.</p><p>Solid firms that paid yields lower than 2% fell by even more. Chubb (CB) lost 14.4% YTD despite strong factor grades in growth and profitability.</p><p></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/49880ec422af73bee8548cddadb6aaa9\" tg-width=\"182\" tg-height=\"116\"/></p><p>Seeking Alpha</p><p>Income investors should not buy stocks solely only high yield. Chubb is increasing shareholder returns by buying back $5 billion worth of shares. Conversely, Verizon (VZ) has a dividend that yields 7.36%. Dividends from tobacco firm Altria Group (MO) yield 8.22% after trading ex-dividend on June 14.</p><p>Those firms have near-term headwinds from a slowing economy. Verizon risks reporting lower average revenue per user if customers downgrade their service plan. Smoking and vaping customers are unlikely to cut consumption of Altria products. Unfortunately, Altria shareholders need to ride out the Anheuser-Busch InBev (BUD) controversy. Altria owns a 9% stake in the firm. The advertising controversy caused customers to boycott its product.</p><h2>Ignore Fiscal Policy</h2><p>Reporters asked Chair Powell about the government&#39;s trillions in spending policy, along with the accumulated debt. Powell said that fiscal policy is not the FOMC&#39;s mandate. Its objectives are achieving maximum employment and price stability.</p><p>Investors should look at least three months&#39; worth of economic data and their trends. The core PCE must trend lower before the Fed considers cutting rates.</p><p>June 30, 2023, is the next PCE report. It will most certainly come in at above the Fed&#39;s 2% target. Still, any drop would suggest that rates would start falling soon. At the very least, rates will fall starting in January 2024.</p><h2>Is 2% Inflation Achievable?</h2><p>Skeptics may scoff at the 2% inflation target. It will take the rest of this year and next year for that figure to fall to the 3.5% to 4.0% range. Investors should expect high interest rates are here to stay. Those who held money market funds missed out on stock gains this year. Nasdaq gained more than 33% from its lows and S&amp;P 500 is up 14.3%.</p><p>Instead of chasing the market now, investors may continue to hold above-average levels of cash. Schwab Money fund (SNAXX) yields will rise from over 5%, as will the Vanguard money funds (VUSXX). The 0-3 Month Treasury Bond ETF (SGOV) yield is 3.57%. It will rise again after two more rate hikes.</p><h2>Your Takeaway</h2><p>The Fed did not satisfy bullish investors with future rate hikes. It did not cause a &#34;sell on the news&#34; after pausing the hike this time. It struck a good balance for growth and income investors. With a clear Fed policy ahead, investors may allocate their holdings spread among cash, dividend income, and growth.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Why The Fed Has Just One Core Problem After The Rate Skip</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nWhy The Fed Has Just One Core Problem After The Rate Skip\n</h2>\n\n<h4 class=\"meta\">\n\n\n2023-06-15 08:02 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4611561-why-fed-has-just-one-core-problem-after-the-rate-skip><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Ahead of the Federal Open Market Committee meeting, markets swooned. When the Fed announced it would skip raising interest rates from the June meeting, the S&P 500 (SP500) closed exactly flat. Markets...</p>\n\n<a href=\"https://seekingalpha.com/article/4611561-why-fed-has-just-one-core-problem-after-the-rate-skip\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{".IXIC":"NASDAQ Composite",".DJI":"道琼斯",".SPX":"S&P 500 Index"},"source_url":"https://seekingalpha.com/article/4611561-why-fed-has-just-one-core-problem-after-the-rate-skip","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2343999353","content_text":"Ahead of the Federal Open Market Committee meeting, markets swooned. When the Fed announced it would skip raising interest rates from the June meeting, the S&P 500 (SP500) closed exactly flat. Markets largely anticipated the central bank would break its consecutive strings of rate hikes. However, it did not expect plans for two more rate hikes sometime in the rest of 2023.Core inflation is the root of the Fed's problem. The downward direction since peaking late last year is favorable. The persistently high level is the core problem.Fed DecisionThe Fed voted unanimously to keep the interest rate paid on reserve balances at 5.15%, effective June 15, 2023. The Fed Funds rate will stay in the target range of 5.0% to 5.25%. In the question and answer session, Fed Chair Jerome Powell said the changed the rate of interest rate increases. This is the natural course for its data-driven policy in achieving price stability at maximum employment.The Fed now has a terminal rate of 5.6%. The core price consumption expenditure remains persistently above target. It was 4.7% for much of this year, as shown below.Trading EconomicsThis is above the Fed's 2.0% inflation target. Until this persistently high rate falls, the central bank needs to raise rates two more times this year.The job market may withstand this hawkish policy. Unemployment rose to 3.7%, up from the prior 3.4%. It has room to let unemployment rise to 4.5% this year.No Rate Cuts in 2023Chair Powell said that the FOMC members were unanimous in refraining from cutting rates. Ongoing hopes of a Fed Pivot, or a rate hike, in 2023 are hopeful at best. Treasury yields were mixed. The 6-month (US6M) and 12-month (US12M) yields rose after the meeting.seekingalpha.comThe 30-year (US30Y) fell by 1.56% to adjust for expectations of another 50 bps increase this year. If markets expect rates rising no more than 50 bps in the rate hike cycle, it suggests that the 30-year ETF (TLT) will find support at around $102.00. Conservative income investors may wait for the momentum grade to improve from an \"F\" first.Implications of a 5.6% Terminal RateDividend income investors adjusted for the higher rate environment earlier this year. Widely held companies that paid dividends in the 3.0% yield range fell. For example, Johnson & Johnson (JNJ) is down in the year-to-date period.Solid firms that paid yields lower than 2% fell by even more. Chubb (CB) lost 14.4% YTD despite strong factor grades in growth and profitability.Seeking AlphaIncome investors should not buy stocks solely only high yield. Chubb is increasing shareholder returns by buying back $5 billion worth of shares. Conversely, Verizon (VZ) has a dividend that yields 7.36%. Dividends from tobacco firm Altria Group (MO) yield 8.22% after trading ex-dividend on June 14.Those firms have near-term headwinds from a slowing economy. Verizon risks reporting lower average revenue per user if customers downgrade their service plan. Smoking and vaping customers are unlikely to cut consumption of Altria products. Unfortunately, Altria shareholders need to ride out the Anheuser-Busch InBev (BUD) controversy. Altria owns a 9% stake in the firm. The advertising controversy caused customers to boycott its product.Ignore Fiscal PolicyReporters asked Chair Powell about the government's trillions in spending policy, along with the accumulated debt. Powell said that fiscal policy is not the FOMC's mandate. Its objectives are achieving maximum employment and price stability.Investors should look at least three months' worth of economic data and their trends. The core PCE must trend lower before the Fed considers cutting rates.June 30, 2023, is the next PCE report. It will most certainly come in at above the Fed's 2% target. Still, any drop would suggest that rates would start falling soon. At the very least, rates will fall starting in January 2024.Is 2% Inflation Achievable?Skeptics may scoff at the 2% inflation target. It will take the rest of this year and next year for that figure to fall to the 3.5% to 4.0% range. Investors should expect high interest rates are here to stay. Those who held money market funds missed out on stock gains this year. Nasdaq gained more than 33% from its lows and S&P 500 is up 14.3%.Instead of chasing the market now, investors may continue to hold above-average levels of cash. Schwab Money fund (SNAXX) yields will rise from over 5%, as will the Vanguard money funds (VUSXX). The 0-3 Month Treasury Bond ETF (SGOV) yield is 3.57%. It will rise again after two more rate hikes.Your TakeawayThe Fed did not satisfy bullish investors with future rate hikes. It did not cause a \"sell on the news\" after pausing the hike this time. It struck a good balance for growth and income investors. With a clear Fed policy ahead, investors may allocate their holdings spread among cash, dividend income, and growth.","news_type":1},"isVote":1,"tweetType":1,"viewCount":415,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":187447872016488,"gmtCreate":1686791450883,"gmtModify":1686793322996,"author":{"id":"4105239963331670","authorId":"4105239963331670","name":"Llim","avatar":"https://community-static.tradeup.com/news/ebdd6aa492c9d80d8a2c1a18334bff87","crmLevel":5,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4105239963331670","authorIdStr":"4105239963331670"},"themes":[],"htmlText":"What the helllll....No shit","listText":"What the helllll....No shit","text":"What the helllll....No shit","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/187447872016488","isVote":1,"tweetType":1,"viewCount":263,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":187219643990256,"gmtCreate":1686735546112,"gmtModify":1686736481329,"author":{"id":"4117336023184202","authorId":"4117336023184202","name":"runningjames","avatar":"https://community-static.tradeup.com/news/3467c93ce8ec8c583f28f405e68f0c00","crmLevel":2,"crmLevelSwitch":1,"followedFlag":false,"idStr":"4117336023184202","authorIdStr":"4117336023184202"},"themes":[],"htmlText":"FED should rise hike to cool the stubborn inflation further rather than wait and see... They have been seeing that for last 12 months. Pause and likely increase next month will not meet their objective.&nbsp;","listText":"FED should rise hike to cool the stubborn inflation further rather than wait and see... They have been seeing that for last 12 months. Pause and likely increase next month will not meet their objective.&nbsp;","text":"FED should rise hike to cool the stubborn inflation further rather than wait and see... They have been seeing that for last 12 months. Pause and likely increase next month will not meet their objective.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":9,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/187219643990256","repostId":"1112430087","repostType":2,"repost":{"id":"1112430087","kind":"news","weMediaInfo":{"introduction":"Market news in one chart.","home_visible":1,"media_name":"Tiger Chart","id":"1069054253","head_image":"https://community-static.tradeup.com/news/d1ccb633d15afc1500b6785ea81e223c"},"pubTimestamp":1686729618,"share":"https://ttm.financial/m/news/1112430087?lang=&edition=fundamental","pubTime":"2023-06-14 16:00","market":"us","language":"en","title":"A Guide to the Fed's Interest Rate Decision: Pause With Option to Hike","url":"https://stock-news.laohu8.com/highlight/detail?id=1112430087","media":"Tiger Chart","summary":"Federal Reserve policymakers are poised to pause their hiking of interest rates for the first time i","content":"<html><head></head><body><p>Federal Reserve policymakers are poised to pause their hiking of interest rates for the first time in 15 months, while retaining a tightening bias that signals a possible resumption of moves as soon as next month.</p><p style=\"text-align: start;\">The rate decision and committee forecasts will be released at 2 p.m. in Washington. Chair Jerome Powell will hold a press conference 30 minutes later.</p><p style=\"text-align: start;\">Powell has signaled that Fed leaders would prefer to wait to evaluate the impact of past increases on the economy as well as of recent banking failures on credit conditions. Yet with inflation still more than twice the central bank’s goal, the committee is likely to emphasize it’s keeping open its options to hike again in July or September. </p><p style=\"text-align: start;\">“This will be one of the trickier press conferences for Chair Powell, who I think will be aiming to keep market probability of a July hike reasonably high,” said Dean Maki, chief economist at Point72 and a former Fed researcher.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/7c7d83901db86398bce2c3f5916fc5a1\" tg-width=\"1080\" tg-height=\"1132\"/></p><h3 style=\"text-align: start;\">What Bloomberg Economics Says...</h3><blockquote>“The Fed will likely keep rates on hold at the June FOMC meeting for the first time since it began this hiking cycle in March 2022. Chairman Jerome Powell and Co. likely will characterize the decision as a “hawkish skip,” maintaining a bias toward hiking at the July meeting.”</blockquote><blockquote>— Anna Wong, Stuart Paul, Eliza Winger and Jonathan Church</blockquote><h3 style=\"text-align: start;\">June Rates</h3><p style=\"text-align: start;\">A June surprise is certainly possible. While Wall Street mostly agrees the Fed will pause, Citigroup Inc. economists and those at LH Meyer/Monetary Policy Analytics in Washington are predicting a June hike. Meyer’s firm cites Powell’s emphasis on risk management, with elevated inflation and a too-hot labor market.</p><p>The decision comes following the latest report Tuesday on the consumer price index, which showed headline inflation slowed but core prices excluding food and energy continued to rise at a pace that’s likely concerning for Fed officials.</p><p style=\"text-align: start;\">“Inflation is still too high,” said Lindsey Piegza, chief economist at Stifel Nicolaus &amp; Co.. “The Fed opened the door for a pause and to not walk through that door now would cause unnecessary concern. But they are going to have to communicate their work is not done.”</p><h3 style=\"text-align: start;\">FOMC Forecasts</h3><p style=\"text-align: start;\">Wall Street will be focused on whether the “dot plot” in the Summary of Economic Projections shows the committee seems determined to hike again. </p><p style=\"text-align: start;\">The central bank is divided between more dovish participants who are ready to stick with the committee’s March forecast of peak rates of 5.1%, and hawks who want to project a higher terminal rate of 5.4% or more. Economists surveyed by Bloomberg expect the median projection will be unchanged.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/103656149275b9b96321d05af6b2e45a\" tg-width=\"984\" tg-height=\"573\"/></p><p>The committee could raise its forecast for 2023 growth, look for a firmer labor market with less unemployment this year and tweak its inflation forecast higher. </p><p style=\"text-align: start;\">The upshot of the forecasts would be “hawkish compared to market pricing, because they would indicate this is just a skip, not a pause,” said Sonia Meskin, head of US macro at BNY Mellon Investment Management. </p><h3 style=\"text-align: start;\">FOMC Statement</h3><p style=\"text-align: start;\">The bulk of the statement is likely to be nearly identical to the May statement, retaining a hiking bias without a firm commitment. One option would be for the committee to note it is keeping rates unchanged “for now” or “at this meeting,” implying the possibility of a future move.</p><p style=\"text-align: start;\">The statement is likely to continue to describe growth as “modest” and job gains as “robust,” reflecting recent mixed data.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/a25850e303c04e9feb81b84655739019\" alt=\"\" title=\"\" tg-width=\"930\" tg-height=\"523\"/></p><h3 style=\"text-align: start;\">Dissents</h3><p style=\"text-align: start;\">About 40% of economists expect a dissent at the meeting, which would be a break from the mostly unified votes by the FOMC. Minneapolis Fed President Neel Kashkari, Dallas Fed President Lorie Logan and Governor Christopher Waller, all of whom are seen as hawks pushing for higher rates, are the most likely to oppose a pause.</p><p>A hawkish dissent might reinforce the view that the committee is mulling additional hikes this summer. The last time a governor dissented on monetary policy was Mark Olson in September 2005. </p><h3 style=\"text-align: start;\">Press Conference</h3><p style=\"text-align: start;\">Powell is likely to be pressed to explain why the Fed officials are suggesting future tightening could be needed, but they aren’t moving at this meeting.</p><p style=\"text-align: start;\">“The central tension, if they pause but keep a tightening bias, is: If they’re so sure about the need for tightening in the future then why wasn’t it enough to hike now?” said Derek Tang of LH Meyer/Monetary Policy Analytics. </p><p style=\"text-align: start;\">The chair will be questioned on the outlook for July and September meetings, as well as whether he continues to see a soft landing as likely for the US economy. He’ll also be asked to assess the impact on credit from bank failures in March.</p></body></html>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>A Guide to the Fed's Interest Rate Decision: Pause With Option to Hike</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nA Guide to the Fed's Interest Rate Decision: Pause With Option to Hike\n</h2>\n\n<h4 class=\"meta\">\n\n\n<a class=\"head\" href=\"https://laohu8.com/wemedia/1069054253\">\n\n\n<div class=\"h-thumb\" style=\"background-image:url(https://community-static.tradeup.com/news/d1ccb633d15afc1500b6785ea81e223c);background-size:cover;\"></div>\n\n<div class=\"h-content\">\n<p class=\"h-name\">Tiger Chart </p>\n<p class=\"h-time\">2023-06-14 16:00</p>\n</div>\n\n</a>\n\n\n</h4>\n\n</header>\n<article>\n<html><head></head><body><p>Federal Reserve policymakers are poised to pause their hiking of interest rates for the first time in 15 months, while retaining a tightening bias that signals a possible resumption of moves as soon as next month.</p><p style=\"text-align: start;\">The rate decision and committee forecasts will be released at 2 p.m. in Washington. Chair Jerome Powell will hold a press conference 30 minutes later.</p><p style=\"text-align: start;\">Powell has signaled that Fed leaders would prefer to wait to evaluate the impact of past increases on the economy as well as of recent banking failures on credit conditions. Yet with inflation still more than twice the central bank’s goal, the committee is likely to emphasize it’s keeping open its options to hike again in July or September. </p><p style=\"text-align: start;\">“This will be one of the trickier press conferences for Chair Powell, who I think will be aiming to keep market probability of a July hike reasonably high,” said Dean Maki, chief economist at Point72 and a former Fed researcher.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/7c7d83901db86398bce2c3f5916fc5a1\" tg-width=\"1080\" tg-height=\"1132\"/></p><h3 style=\"text-align: start;\">What Bloomberg Economics Says...</h3><blockquote>“The Fed will likely keep rates on hold at the June FOMC meeting for the first time since it began this hiking cycle in March 2022. Chairman Jerome Powell and Co. likely will characterize the decision as a “hawkish skip,” maintaining a bias toward hiking at the July meeting.”</blockquote><blockquote>— Anna Wong, Stuart Paul, Eliza Winger and Jonathan Church</blockquote><h3 style=\"text-align: start;\">June Rates</h3><p style=\"text-align: start;\">A June surprise is certainly possible. While Wall Street mostly agrees the Fed will pause, Citigroup Inc. economists and those at LH Meyer/Monetary Policy Analytics in Washington are predicting a June hike. Meyer’s firm cites Powell’s emphasis on risk management, with elevated inflation and a too-hot labor market.</p><p>The decision comes following the latest report Tuesday on the consumer price index, which showed headline inflation slowed but core prices excluding food and energy continued to rise at a pace that’s likely concerning for Fed officials.</p><p style=\"text-align: start;\">“Inflation is still too high,” said Lindsey Piegza, chief economist at Stifel Nicolaus &amp; Co.. “The Fed opened the door for a pause and to not walk through that door now would cause unnecessary concern. But they are going to have to communicate their work is not done.”</p><h3 style=\"text-align: start;\">FOMC Forecasts</h3><p style=\"text-align: start;\">Wall Street will be focused on whether the “dot plot” in the Summary of Economic Projections shows the committee seems determined to hike again. </p><p style=\"text-align: start;\">The central bank is divided between more dovish participants who are ready to stick with the committee’s March forecast of peak rates of 5.1%, and hawks who want to project a higher terminal rate of 5.4% or more. Economists surveyed by Bloomberg expect the median projection will be unchanged.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/103656149275b9b96321d05af6b2e45a\" tg-width=\"984\" tg-height=\"573\"/></p><p>The committee could raise its forecast for 2023 growth, look for a firmer labor market with less unemployment this year and tweak its inflation forecast higher. </p><p style=\"text-align: start;\">The upshot of the forecasts would be “hawkish compared to market pricing, because they would indicate this is just a skip, not a pause,” said Sonia Meskin, head of US macro at BNY Mellon Investment Management. </p><h3 style=\"text-align: start;\">FOMC Statement</h3><p style=\"text-align: start;\">The bulk of the statement is likely to be nearly identical to the May statement, retaining a hiking bias without a firm commitment. One option would be for the committee to note it is keeping rates unchanged “for now” or “at this meeting,” implying the possibility of a future move.</p><p style=\"text-align: start;\">The statement is likely to continue to describe growth as “modest” and job gains as “robust,” reflecting recent mixed data.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/a25850e303c04e9feb81b84655739019\" alt=\"\" title=\"\" tg-width=\"930\" tg-height=\"523\"/></p><h3 style=\"text-align: start;\">Dissents</h3><p style=\"text-align: start;\">About 40% of economists expect a dissent at the meeting, which would be a break from the mostly unified votes by the FOMC. Minneapolis Fed President Neel Kashkari, Dallas Fed President Lorie Logan and Governor Christopher Waller, all of whom are seen as hawks pushing for higher rates, are the most likely to oppose a pause.</p><p>A hawkish dissent might reinforce the view that the committee is mulling additional hikes this summer. The last time a governor dissented on monetary policy was Mark Olson in September 2005. </p><h3 style=\"text-align: start;\">Press Conference</h3><p style=\"text-align: start;\">Powell is likely to be pressed to explain why the Fed officials are suggesting future tightening could be needed, but they aren’t moving at this meeting.</p><p style=\"text-align: start;\">“The central tension, if they pause but keep a tightening bias, is: If they’re so sure about the need for tightening in the future then why wasn’t it enough to hike now?” said Derek Tang of LH Meyer/Monetary Policy Analytics. </p><p style=\"text-align: start;\">The chair will be questioned on the outlook for July and September meetings, as well as whether he continues to see a soft landing as likely for the US economy. He’ll also be asked to assess the impact on credit from bank failures in March.</p></body></html>\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{".IXIC":"NASDAQ Composite",".DJI":"道琼斯",".SPX":"S&P 500 Index"},"source_url":"","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1112430087","content_text":"Federal Reserve policymakers are poised to pause their hiking of interest rates for the first time in 15 months, while retaining a tightening bias that signals a possible resumption of moves as soon as next month.The rate decision and committee forecasts will be released at 2 p.m. in Washington. Chair Jerome Powell will hold a press conference 30 minutes later.Powell has signaled that Fed leaders would prefer to wait to evaluate the impact of past increases on the economy as well as of recent banking failures on credit conditions. Yet with inflation still more than twice the central bank’s goal, the committee is likely to emphasize it’s keeping open its options to hike again in July or September. “This will be one of the trickier press conferences for Chair Powell, who I think will be aiming to keep market probability of a July hike reasonably high,” said Dean Maki, chief economist at Point72 and a former Fed researcher.What Bloomberg Economics Says...“The Fed will likely keep rates on hold at the June FOMC meeting for the first time since it began this hiking cycle in March 2022. Chairman Jerome Powell and Co. likely will characterize the decision as a “hawkish skip,” maintaining a bias toward hiking at the July meeting.”— Anna Wong, Stuart Paul, Eliza Winger and Jonathan ChurchJune RatesA June surprise is certainly possible. While Wall Street mostly agrees the Fed will pause, Citigroup Inc. economists and those at LH Meyer/Monetary Policy Analytics in Washington are predicting a June hike. Meyer’s firm cites Powell’s emphasis on risk management, with elevated inflation and a too-hot labor market.The decision comes following the latest report Tuesday on the consumer price index, which showed headline inflation slowed but core prices excluding food and energy continued to rise at a pace that’s likely concerning for Fed officials.“Inflation is still too high,” said Lindsey Piegza, chief economist at Stifel Nicolaus & Co.. “The Fed opened the door for a pause and to not walk through that door now would cause unnecessary concern. But they are going to have to communicate their work is not done.”FOMC ForecastsWall Street will be focused on whether the “dot plot” in the Summary of Economic Projections shows the committee seems determined to hike again. The central bank is divided between more dovish participants who are ready to stick with the committee’s March forecast of peak rates of 5.1%, and hawks who want to project a higher terminal rate of 5.4% or more. Economists surveyed by Bloomberg expect the median projection will be unchanged.The committee could raise its forecast for 2023 growth, look for a firmer labor market with less unemployment this year and tweak its inflation forecast higher. The upshot of the forecasts would be “hawkish compared to market pricing, because they would indicate this is just a skip, not a pause,” said Sonia Meskin, head of US macro at BNY Mellon Investment Management. FOMC StatementThe bulk of the statement is likely to be nearly identical to the May statement, retaining a hiking bias without a firm commitment. One option would be for the committee to note it is keeping rates unchanged “for now” or “at this meeting,” implying the possibility of a future move.The statement is likely to continue to describe growth as “modest” and job gains as “robust,” reflecting recent mixed data.DissentsAbout 40% of economists expect a dissent at the meeting, which would be a break from the mostly unified votes by the FOMC. Minneapolis Fed President Neel Kashkari, Dallas Fed President Lorie Logan and Governor Christopher Waller, all of whom are seen as hawks pushing for higher rates, are the most likely to oppose a pause.A hawkish dissent might reinforce the view that the committee is mulling additional hikes this summer. The last time a governor dissented on monetary policy was Mark Olson in September 2005. Press ConferencePowell is likely to be pressed to explain why the Fed officials are suggesting future tightening could be needed, but they aren’t moving at this meeting.“The central tension, if they pause but keep a tightening bias, is: If they’re so sure about the need for tightening in the future then why wasn’t it enough to hike now?” said Derek Tang of LH Meyer/Monetary Policy Analytics. The chair will be questioned on the outlook for July and September meetings, as well as whether he continues to see a soft landing as likely for the US economy. He’ll also be asked to assess the impact on credit from bank failures in March.","news_type":1},"isVote":1,"tweetType":1,"viewCount":474,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":187127503196192,"gmtCreate":1686724700959,"gmtModify":1686724705786,"author":{"id":"4097112435042780","authorId":"4097112435042780","name":"Andrew cub","avatar":"https://static.tigerbbs.com/b5a04c94ed8355d7edc5ccec2886a154","crmLevel":6,"crmLevelSwitch":1,"followedFlag":false,"idStr":"4097112435042780","authorIdStr":"4097112435042780"},"themes":[],"htmlText":"Go n eat pranta better","listText":"Go n eat pranta better","text":"Go n eat pranta better","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":10,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/187127503196192","repostId":"2343567514","repostType":4,"repost":{"id":"2343567514","kind":"highlight","pubTimestamp":1686704403,"share":"https://ttm.financial/m/news/2343567514?lang=&edition=fundamental","pubTime":"2023-06-14 09:00","market":"us","language":"en","title":"Stocks Are Dangerously Overvalued With More Rate Hikes To Come","url":"https://stock-news.laohu8.com/highlight/detail?id=2343567514","media":"Seekingalpha","summary":"Douglas Rissing The CPI report shows that inflation has remained stubbornly slow to fall, with the CORE CPI rising at 5.3%, surpassing expectations for 5.2%, creating a problem for the Fed. This will ","content":"<html><head></head><body><p>The CPI report shows that inflation has remained stubbornly slow to fall, with the CORE CPI rising at 5.3%, surpassing expectations for 5.2%, creating a problem for the Fed. This will likely lead the Fed to revise its summary of economic projections to show a higher inflation outlook and more rate hikes on the dot plot.</p><p>This means that yields across the curve are likely to stay elevated and move higher in the months ahead at a time when liquidity is now being withdrawn from the overall market and equities are dangerously overvalued.</p><p></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/2120bacd7ae744d7a9b26b91f6d1a51d\" tg-width=\"640\" tg-height=\"286\"/></p><p>Bloomberg</p><h2>More Rate Hikes</h2><p>The market is not predicting a June rate hike, with the odds at just 10% as of this writing, and it seems unlikely that Fed will try and surprise the market, given its history. But Fed Fund futures are pricing a nearly 70% chance of a rate hike by July. With the next FOMC meeting coming at the end of July, the Fed will have more data to assess its projected rate path. However, given the hotter core CPI and searing labor market reports, it will probably mean that the dot plot will reflect another rate hike or two in 2023.</p><p>The reason is that core inflation is expected to remain sticky, and the Cleveland Fed estimates Core CPI for June at 5.1%. This means the chance the Fed is done raising rates seems slim at this point, and that will likely be reflected in the dot plots when the Summary of Economic Projections comes out.</p><p>Additionally, headline CPI on a non-seasonal adjusted basis rose by 0.3% in May. That has inflation rising at a 4.4% annualized rate of change over the past three and six months. This does suggest that it may be challenging to get inflation down now that it is entering this 3% to 4% range. It&#39;s important to remember that CPI on a year over year is measured on a non-seasonally adjusted basis, and using a seasonally adjusted CPI metric to annualize the rate of change may understate actual inflation due to changes in seasonal adjustments, which happened in 2022.</p><p></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/538b5d9f6f2e8956f767d8f53d71b8c9\" tg-width=\"640\" tg-height=\"294\"/></p><p>Bloomberg</p><p>This is why bond yields aren&#39;t coming down and are rising following the CPI report. Especially when looking at the back of the curve, as markets price in a higher for longer monetary policy from the Fed, with the 30-year rate rising back to 3.92%. But more importantly, real rates are pushing higher, with the 10-Yr TIP rate now trading at 1.58% and approaching that critical level of resistance that could lead to a big break out and push to new highs.</p><p></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/b14a0538cce121027cd003790fb61875\" tg-width=\"640\" tg-height=\"294\"/></p><p>Bloomberg</p><p>The 10-yr TIP is a critical rate to follow because assets such as long duration growth are priced using real rates, with the Nasdaq 100 being key. The spread between the Nasdaq 100 earnings yield and the 10-yr real yield is now at 1.93%, levels not seen since the mid-2000s, when the Nasdaq was in the middle of a valuation reset from the 2000 bubble. More importantly, the Nasdaq 100 earnings yield is 235 bps below the historical average of the last 10 years.</p><p></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/763a5b0d5b2b8c255726b71f988c02aa\" tg-width=\"640\" tg-height=\"363\"/></p><p>Bloomberg</p><p>The other piece of the puzzle is that liquidity is now starting to be withdrawn from the Nasdaq 100 futures market, as measured by the depth of the book. The last time the depth of the book declined was back in August of 2022, which also marked a significant top in the market.</p><p></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/810669f93ed838683f831e50269496db\" tg-width=\"640\" tg-height=\"480\"/></p><p>CME Group</p><p>The addition and withdrawal of liquidity in the Nasdaq futures market in August 2022 coincided with a move up and down reserve balances held at the Federal Reserve. Currently, reserve balances are likely to decline due to the refill of the Treasury General Account. Further, as we move into the quarter end, the reverse repo activity should begin to climb, leading to lower reserves.</p><p></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/9fc60fcb97695095105c1677befc4bd5\" tg-width=\"640\" tg-height=\"294\"/></p><p>Bloomberg</p><p>The path for inflation is sticky and will continue not to be smooth, and if the current rate of changes remains, headline inflation could very well begin to accelerate in the second half of 2023 as the base effects of the first half of 2022 wane. Translating into yields staying elevated and leaving stock particularly vulnerable as the equity risk premium gets dangerously narrow and liquidity is withdrawn from the market.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Stocks Are Dangerously Overvalued With More Rate Hikes To Come</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nStocks Are Dangerously Overvalued With More Rate Hikes To Come\n</h2>\n\n<h4 class=\"meta\">\n\n\n2023-06-14 09:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4611258-stocks-are-dangerously-overvalued-with-more-rate-hikes-to-come><strong>Seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>The CPI report shows that inflation has remained stubbornly slow to fall, with the CORE CPI rising at 5.3%, surpassing expectations for 5.2%, creating a problem for the Fed. This will likely lead the ...</p>\n\n<a href=\"https://seekingalpha.com/article/4611258-stocks-are-dangerously-overvalued-with-more-rate-hikes-to-come\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{".SPX":"S&P 500 Index",".IXIC":"NASDAQ Composite",".DJI":"道琼斯"},"source_url":"https://seekingalpha.com/article/4611258-stocks-are-dangerously-overvalued-with-more-rate-hikes-to-come","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2343567514","content_text":"The CPI report shows that inflation has remained stubbornly slow to fall, with the CORE CPI rising at 5.3%, surpassing expectations for 5.2%, creating a problem for the Fed. This will likely lead the Fed to revise its summary of economic projections to show a higher inflation outlook and more rate hikes on the dot plot.This means that yields across the curve are likely to stay elevated and move higher in the months ahead at a time when liquidity is now being withdrawn from the overall market and equities are dangerously overvalued.BloombergMore Rate HikesThe market is not predicting a June rate hike, with the odds at just 10% as of this writing, and it seems unlikely that Fed will try and surprise the market, given its history. But Fed Fund futures are pricing a nearly 70% chance of a rate hike by July. With the next FOMC meeting coming at the end of July, the Fed will have more data to assess its projected rate path. However, given the hotter core CPI and searing labor market reports, it will probably mean that the dot plot will reflect another rate hike or two in 2023.The reason is that core inflation is expected to remain sticky, and the Cleveland Fed estimates Core CPI for June at 5.1%. This means the chance the Fed is done raising rates seems slim at this point, and that will likely be reflected in the dot plots when the Summary of Economic Projections comes out.Additionally, headline CPI on a non-seasonal adjusted basis rose by 0.3% in May. That has inflation rising at a 4.4% annualized rate of change over the past three and six months. This does suggest that it may be challenging to get inflation down now that it is entering this 3% to 4% range. It's important to remember that CPI on a year over year is measured on a non-seasonally adjusted basis, and using a seasonally adjusted CPI metric to annualize the rate of change may understate actual inflation due to changes in seasonal adjustments, which happened in 2022.BloombergThis is why bond yields aren't coming down and are rising following the CPI report. Especially when looking at the back of the curve, as markets price in a higher for longer monetary policy from the Fed, with the 30-year rate rising back to 3.92%. But more importantly, real rates are pushing higher, with the 10-Yr TIP rate now trading at 1.58% and approaching that critical level of resistance that could lead to a big break out and push to new highs.BloombergThe 10-yr TIP is a critical rate to follow because assets such as long duration growth are priced using real rates, with the Nasdaq 100 being key. The spread between the Nasdaq 100 earnings yield and the 10-yr real yield is now at 1.93%, levels not seen since the mid-2000s, when the Nasdaq was in the middle of a valuation reset from the 2000 bubble. More importantly, the Nasdaq 100 earnings yield is 235 bps below the historical average of the last 10 years.BloombergThe other piece of the puzzle is that liquidity is now starting to be withdrawn from the Nasdaq 100 futures market, as measured by the depth of the book. The last time the depth of the book declined was back in August of 2022, which also marked a significant top in the market.CME GroupThe addition and withdrawal of liquidity in the Nasdaq futures market in August 2022 coincided with a move up and down reserve balances held at the Federal Reserve. Currently, reserve balances are likely to decline due to the refill of the Treasury General Account. Further, as we move into the quarter end, the reverse repo activity should begin to climb, leading to lower reserves.BloombergThe path for inflation is sticky and will continue not to be smooth, and if the current rate of changes remains, headline inflation could very well begin to accelerate in the second half of 2023 as the base effects of the first half of 2022 wane. Translating into yields staying elevated and leaving stock particularly vulnerable as the equity risk premium gets dangerously narrow and liquidity is withdrawn from the market.","news_type":1},"isVote":1,"tweetType":1,"viewCount":373,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":186767540052088,"gmtCreate":1686636952233,"gmtModify":1686636956789,"author":{"id":"4107578488971860","authorId":"4107578488971860","name":"Im Kamal","avatar":"https://static.itradeup.com/news/6fbf423ef5ef66f63377e3a80cd07e5d","crmLevel":2,"crmLevelSwitch":1,"followedFlag":false,"idStr":"4107578488971860","authorIdStr":"4107578488971860"},"themes":[],"htmlText":"US economy sinking in tornado force. Raising rate to curb inflation is just a drama. They know as now traditional way in relation ratecut and inflation no longer working. What they do is find a way to strengthen dollar. To the stage, rate hike will halt US economic as whole. Till than 2024","listText":"US economy sinking in tornado force. Raising rate to curb inflation is just a drama. They know as now traditional way in relation ratecut and inflation no longer working. What they do is find a way to strengthen dollar. To the stage, rate hike will halt US economic as whole. Till than 2024","text":"US economy sinking in tornado force. Raising rate to curb inflation is just a drama. They know as now traditional way in relation ratecut and inflation no longer working. What they do is find a way to strengthen dollar. To the stage, rate hike will halt US economic as whole. Till than 2024","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":8,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/186767540052088","repostId":"2342150364","repostType":2,"repost":{"id":"2342150364","kind":"highlight","weMediaInfo":{"introduction":"Dow Jones publishes the world’s most trusted business news and financial information in a variety of media.","home_visible":0,"media_name":"Dow Jones","id":"106","head_image":"https://static.tigerbbs.com/150f88aa4d182df19190059f4a365e99"},"pubTimestamp":1686563244,"share":"https://ttm.financial/m/news/2342150364?lang=&edition=fundamental","pubTime":"2023-06-12 17:47","market":"us","language":"en","title":"Jerome Powell's Big Problem Just Got Even More Complicated","url":"https://stock-news.laohu8.com/highlight/detail?id=2342150364","media":"Dow Jones","summary":"Federal Reserve Chair Jerome Powell finds himself in a place no central banker wants to be: working to avert a credit crunch, which calls for looser monetary policy, while fighting high inflation, which demands the opposite.Strains in the banking industry, which followed the collapse of three midsize lenders this spring, help explain why some central bank officials are leaning toward holding interest rates steady at their meeting this week -- even though the economy and inflation haven't slowed as much as they expected.Fed officials don't think a crisis is imminent, attributing recent troubles to idiosyncrasies at the three banks. But current and former central bankers say if stresses worsen, the Fed will face a more difficult trade off. Powell and his colleagues would have to choose between focusing on failing banks or high inflation.Bank supervisors didn't quickly spot how those rising rates had created a dangerous mismatch between some ba","content":"<html><head></head><body><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/359cd2459df7fe632b14bcb938268e42\" tg-width=\"2000\" tg-height=\"1026\"/></p><p>Federal Reserve Chair Jerome Powell finds himself in a place no central banker wants to be: working to avert a credit crunch, which calls for looser monetary policy, while fighting high inflation, which demands the opposite.</p><p>Strains in the banking industry, which followed the collapse of three midsize lenders this spring, help explain why some central bank officials are leaning toward holding interest rates steady at their meeting this week—even though the economy and inflation haven’t slowed as much as they expected.</p><p>Fed officials don’t think a crisis is imminent, attributing recent troubles to idiosyncrasies at the three banks. But current and former central bankers say if stresses worsen, the Fed will face a more difficult trade off. Powell and his colleagues would have to choose between focusing on failing banks or high inflation.</p><p>“They’re between a rock and a hard place. It’s a very, very tough situation,” said Raghuram Rajan, a former governor of the Reserve Bank of India. “You’re damned if you raise rates significantly more and put even more pressure on the banks, but you’re damned if you don’t” and inflation accelerates.</p><p>One risk is timing: if inflation becomes entrenched in public psychology, becoming self-perpetuating, that could force the Fed to hold short-term interest rates higher for longer.</p><p>“If inflation is going to fall quickly…we might be in a position to be able to cut rates, if not this year, then soon in the new year,” said Minneapolis Fed President Neel Kashkari in an interview last month. “But if, on the other hand, inflation is much more persistent and much more entrenched…then I think the stresses in the banking sector probably become more serious.” </p><p>The economic expansion, the Fed’s credibility and Powell’s legacy are at stake. Powell was appointed to a second term as Fed chair in part because of his popularity in Congress, with his initial response to the Covid shock in 2020 and his handling of President Trump’s attacks earning accolades on both sides of the aisle.</p><p>The past two years have been much rockier. First, the Fed misjudged inflation. More recently, the Fed’s performance on bank regulation has come under fire.</p><h3>Separation principle</h3><p>During the pandemic, the Fed signaled plans to hold interest rates at very low levels for years and purchased trillions of bonds to spur additional borrowing, and the government poured additional stimulus into the economy. The moves pumped banks full of deposits in 2021.</p><p>As inflation hit 9% last year, Powell accelerated interest-rate increases because he and his colleagues wanted to stop an inflationary mind-set from taking root.</p><p>By February, the Fed had increased rates by 4.5 percentage points in one year—more swiftly than any time in the past 40 years. </p><p>Bank supervisors didn’t quickly spot how those rising rates had created a dangerous mismatch between some banks’ assets—securities and loans paying low rates—and liabilities—deposits and other borrowing with higher rates.</p><p>That triggered a run on Silicon Valley Bank in March. </p><p>The Fed and other regulators responded by backstopping the uninsured deposits of SVB and another bank that faced a run, New York-based Signature Bank, on March 12. They also agreed to lend to banks in general on favorable terms, putting money back into the economy.</p><p>But with inflation still too high, the Fed’s rate-setting Federal Open Market Committee lifted rates on March 22. They raised them again in early May, to the current range between 5% and 5.25%, just days after regulators arranged a shotgun sale of a third lender, First Republic Bank, to JPMorgan Chase.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/45cf0414fe9eb2e16d035d9270dd060a\" title=\"A security guard monitored people outside a Silicon Valley Bank office on March 13 in Santa Clara, Calif. PHOTO: JUSTIN SULLIVAN/GETTY IMAGES\" tg-width=\"700\" tg-height=\"466\"/><span>A security guard monitored people outside a Silicon Valley Bank office on March 13 in Santa Clara, Calif. PHOTO: JUSTIN SULLIVAN/GETTY IMAGES</span></p><p>In making these moves, the central bankers were operating under their so-called separation principle: They use emergency lending and other regulatory tools to address financial instability so they can use monetary policy, primarily interest rates, to combat inflation.</p><p>While emergency lending tools prevented other bank runs, they may not have fixed the underlying problem for some regional and midsize banks, whose long-term viability is threatened if higher rates force them to pay significantly more for deposits. </p><p>Banks are facing losses on fixed-rate securities they acquired when rates were very low in 2021, though they don’t have to recognize losses if the investments are held to maturity. The Federal Deposit Insurance Corp. recently estimated such unrealized losses were around $515 billion at the end of March. That number would jump to well above $1 trillion if it included losses on low-yielding mortgages and other loans made when rates were much lower.</p><p>Banks’ emergency borrowing from the Fed remains high, and an index of regional bank stocks is down 19% this year, though it has rebounded from a decline of 29% in early May. Surveys show banks continue to tighten lending standards as their funding costs rise and as they face the prospect of tougher supervision and regulation. </p><p>A credit crunch could initially help the Fed by slowing the economy and easing price pressures, but the slowdown in credit growth could easily get out of control. Raising interest rates in such a scenario could be like smacking a ketchup bottle repeatedly—nothing comes out at first, and then the whole bottle suddenly empties all over your dinner.</p><p>The conventional wisdom holds that rising interest rates are good for banks. While the value of their loans and securities declines, when rates rise, their deposits also become more valuable because banks don’t fully pass along higher rates to depositors.</p><p>This assumes that depositors are unlikely to move their money in search of a higher yield—such as to another bank or a money-market mutual fund. If depositors are mobile, “then higher rates in general start to be pretty bad for banks,” said former Fed governor Jeremy Stein. </p><p>The run on SVB risked waking up sleepy depositors to the possibility of earning more on their money by moving it elsewhere. Several banks have been advertising high-yield savings accounts with rates between 4% and 5%, well above the national average yield of 0.25% for traditional savings accounts, according to Bankrate.com.</p><p>“The worry is that the events of the past few months are for banks what the pandemic was for Zoom use, once people were forced to figure it out,” said Stein.</p><p>Fed regulators are keeping close tabs on 20 to 30 institutions they see as more vulnerable following this spring’s banking turmoil. </p><p>Analysts worry more shoes could drop as the economy slows and defaults rise. Loans on office buildings, whose values have tumbled as remote work reduces demand for those properties, are seen as particularly vulnerable.</p><p>Banks lost deposits after the failureof Silicon Valley BankChange in deposits since January 2021*Source: Federal ReserveNote: Figures are seasonally adjusted and excludecertificates of deposit of more than $100,000. Largebanks are the top 25 institutions.</p><p>Even if banking problems appear to have settled down, “you’re still going to have failures,” said former Dallas Fed President Robert Kaplan. “You’re still going to need to merge a number of them.”</p><p>Any lending downturn could hit small businesses harder than large ones, which rely less on bank loans. Banks with less than $250 billion in assets are responsible for 70% of all lending to firms with fewer than 100 employees.</p><p>Kashkari said he wasn’t seeing evidence of a credit contraction in his Fed district, which includes much of the Upper Midwest. But his experience as a senior Treasury Department official during the 2008 financial crisis makes him recognize “these banking stresses are not necessarily completely behind us,” he said.</p><h3>‘Hanging onto the cliff with their fingernails’</h3><p>While strong inflation, job growth and consumer spending this spring might normally prompt Fed officials to increase rates at their meeting Tuesday and Wednesday, a possible lending pullback from banking strains offers a reason to hold off—a sign the separation principle has limits.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/f7ca5d2665887c949f4a64b8f0de3a4f\" title=\"Minneapolis Fed President Neel Kashkari, shown in 2019. PHOTO: JIM SPELLMAN/GETTY IMAGES\" tg-width=\"700\" tg-height=\"467\"/><span>Minneapolis Fed President Neel Kashkari, shown in 2019. PHOTO: JIM SPELLMAN/GETTY IMAGES</span></p><p>“Our tools can have separate objectives, but their effects are often not entirely independent…because financial and macroeconomic stability are so deeply intertwined,” Powell said on May 19.</p><p>While higher interest rates have been the immediate cause of banks’ losses, lowering short-term rates to reduce pressure on banks would backfire, said Randal Quarles, who was the Fed’s vice chair for bank supervision from 2017 to 2021.</p><p>That is because if inflation doesn’t fall, investors could demand higher yields on medium- and long-term debt to compensate for the risk that inflation erodes their purchasing power. This would be especially harmful for banks, which finance themselves with medium-term debt. “If you haven’t contained inflation, you will have the savings and loan problem all over again,” said Quarles, referring to the failures of hundreds of financial institutions in the 1980s and 1990s.</p><p>Fed officials have suggested that even if they forgo an increase this week, they could nudge rates higher at later meetings. That would give them more time to assess whether economic activity and banking sector conditions are unfolding as they expect.</p><p>“No model is going to say increasing interest rates in June rather than September is going to make a huge difference to the path of inflation, but if you raise interest rates and you already have a lot of embedded problems in the bank portfolio, you may end up causing a more severe recession,” said Eric Rosengren, who was president of the Boston Fed from 2007 to 2021.</p><p>Fed officials are split over whether to raise rates this week. Some worry the economy isn’t slowing down enough and aren’t as concerned about the banking problems. Steady income growth could provide the fuel that allows consumers and businesses to tolerate higher prices and continue spending.</p><p>Cleveland Fed President Loretta Mester in an interview last month said she doesn’t see a compelling reason to hold rates steady until the next move is equally as likely to be up as down. The Fed hasn’t reached that point yet, she said.</p><p>Failing to get a handle on inflation now means &#34;we&#39;re going to have to do a lot more later on, just like Paul Volcker did in the late &#39;70s and early &#39;80s,&#34; said St. Louis Fed President James Bullard at a conference last month. &#34;That&#39;s why I&#39;d like to err on the side of doing a little more here.&#34;</p><p>Bullard also cautioned against extrapolating SVB&#39;s problems to the entire industry because of its high concentration of uninsured deposits that funded a big portfolio of fixed-rate securities.</p><p>Others are worried more about raising rates too far and being forced to make a confusing U-turn to cutting rates if the banking crisis worsens.</p><p>Chicago Fed President Austan Goolsbee said last month&#39;s decision to raise rates was a close call because of uncertainty over how much the banking turmoil would curb lending.</p><p>&#34;We still fundamentally have to figure out the question of &#39;Is this as big of a credit stress event as, say, the S&amp;L problems in the late &#39;80s and early &#39;90s? Is this a temporary thing that is just a rebalancing of deposits from threatened institutions?&#39;&#34; he said in an interview last month.</p><p>Some former Fed officials who regret not raising rates sooner say the central bank should be more patient now. &#34;The Fed&#39;s policy is plenty tight. These things just take longer&#34; to run their course, said Quarles. &#34;Over the course of the summer, you&#39;re going to have a revaluation of assets as people realize, &#39;Oh my gosh, higher rates are going on longer than I thought.&#39;&#34;</p><p>Quarles, who is chairman of a private-equity firm, said he anticipates that will cause more distress for banks, insurers and other financial institutions &#34;that have been hanging onto the cliff with their fingernails, thinking that interest rates are going to start coming down.&#34;</p></body></html>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Jerome Powell's Big Problem Just Got Even More Complicated</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nJerome Powell's Big Problem Just Got Even More Complicated\n</h2>\n\n<h4 class=\"meta\">\n\n\n<div class=\"head\" \">\n\n\n<div class=\"h-thumb\" style=\"background-image:url(https://static.tigerbbs.com/150f88aa4d182df19190059f4a365e99);background-size:cover;\"></div>\n\n<div class=\"h-content\">\n<p class=\"h-name\">Dow Jones </p>\n<p class=\"h-time\">2023-06-12 17:47</p>\n</div>\n\n</div>\n\n\n</h4>\n\n</header>\n<article>\n<html><head></head><body><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/359cd2459df7fe632b14bcb938268e42\" tg-width=\"2000\" tg-height=\"1026\"/></p><p>Federal Reserve Chair Jerome Powell finds himself in a place no central banker wants to be: working to avert a credit crunch, which calls for looser monetary policy, while fighting high inflation, which demands the opposite.</p><p>Strains in the banking industry, which followed the collapse of three midsize lenders this spring, help explain why some central bank officials are leaning toward holding interest rates steady at their meeting this week—even though the economy and inflation haven’t slowed as much as they expected.</p><p>Fed officials don’t think a crisis is imminent, attributing recent troubles to idiosyncrasies at the three banks. But current and former central bankers say if stresses worsen, the Fed will face a more difficult trade off. Powell and his colleagues would have to choose between focusing on failing banks or high inflation.</p><p>“They’re between a rock and a hard place. It’s a very, very tough situation,” said Raghuram Rajan, a former governor of the Reserve Bank of India. “You’re damned if you raise rates significantly more and put even more pressure on the banks, but you’re damned if you don’t” and inflation accelerates.</p><p>One risk is timing: if inflation becomes entrenched in public psychology, becoming self-perpetuating, that could force the Fed to hold short-term interest rates higher for longer.</p><p>“If inflation is going to fall quickly…we might be in a position to be able to cut rates, if not this year, then soon in the new year,” said Minneapolis Fed President Neel Kashkari in an interview last month. “But if, on the other hand, inflation is much more persistent and much more entrenched…then I think the stresses in the banking sector probably become more serious.” </p><p>The economic expansion, the Fed’s credibility and Powell’s legacy are at stake. Powell was appointed to a second term as Fed chair in part because of his popularity in Congress, with his initial response to the Covid shock in 2020 and his handling of President Trump’s attacks earning accolades on both sides of the aisle.</p><p>The past two years have been much rockier. First, the Fed misjudged inflation. More recently, the Fed’s performance on bank regulation has come under fire.</p><h3>Separation principle</h3><p>During the pandemic, the Fed signaled plans to hold interest rates at very low levels for years and purchased trillions of bonds to spur additional borrowing, and the government poured additional stimulus into the economy. The moves pumped banks full of deposits in 2021.</p><p>As inflation hit 9% last year, Powell accelerated interest-rate increases because he and his colleagues wanted to stop an inflationary mind-set from taking root.</p><p>By February, the Fed had increased rates by 4.5 percentage points in one year—more swiftly than any time in the past 40 years. </p><p>Bank supervisors didn’t quickly spot how those rising rates had created a dangerous mismatch between some banks’ assets—securities and loans paying low rates—and liabilities—deposits and other borrowing with higher rates.</p><p>That triggered a run on Silicon Valley Bank in March. </p><p>The Fed and other regulators responded by backstopping the uninsured deposits of SVB and another bank that faced a run, New York-based Signature Bank, on March 12. They also agreed to lend to banks in general on favorable terms, putting money back into the economy.</p><p>But with inflation still too high, the Fed’s rate-setting Federal Open Market Committee lifted rates on March 22. They raised them again in early May, to the current range between 5% and 5.25%, just days after regulators arranged a shotgun sale of a third lender, First Republic Bank, to JPMorgan Chase.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/45cf0414fe9eb2e16d035d9270dd060a\" title=\"A security guard monitored people outside a Silicon Valley Bank office on March 13 in Santa Clara, Calif. PHOTO: JUSTIN SULLIVAN/GETTY IMAGES\" tg-width=\"700\" tg-height=\"466\"/><span>A security guard monitored people outside a Silicon Valley Bank office on March 13 in Santa Clara, Calif. PHOTO: JUSTIN SULLIVAN/GETTY IMAGES</span></p><p>In making these moves, the central bankers were operating under their so-called separation principle: They use emergency lending and other regulatory tools to address financial instability so they can use monetary policy, primarily interest rates, to combat inflation.</p><p>While emergency lending tools prevented other bank runs, they may not have fixed the underlying problem for some regional and midsize banks, whose long-term viability is threatened if higher rates force them to pay significantly more for deposits. </p><p>Banks are facing losses on fixed-rate securities they acquired when rates were very low in 2021, though they don’t have to recognize losses if the investments are held to maturity. The Federal Deposit Insurance Corp. recently estimated such unrealized losses were around $515 billion at the end of March. That number would jump to well above $1 trillion if it included losses on low-yielding mortgages and other loans made when rates were much lower.</p><p>Banks’ emergency borrowing from the Fed remains high, and an index of regional bank stocks is down 19% this year, though it has rebounded from a decline of 29% in early May. Surveys show banks continue to tighten lending standards as their funding costs rise and as they face the prospect of tougher supervision and regulation. </p><p>A credit crunch could initially help the Fed by slowing the economy and easing price pressures, but the slowdown in credit growth could easily get out of control. Raising interest rates in such a scenario could be like smacking a ketchup bottle repeatedly—nothing comes out at first, and then the whole bottle suddenly empties all over your dinner.</p><p>The conventional wisdom holds that rising interest rates are good for banks. While the value of their loans and securities declines, when rates rise, their deposits also become more valuable because banks don’t fully pass along higher rates to depositors.</p><p>This assumes that depositors are unlikely to move their money in search of a higher yield—such as to another bank or a money-market mutual fund. If depositors are mobile, “then higher rates in general start to be pretty bad for banks,” said former Fed governor Jeremy Stein. </p><p>The run on SVB risked waking up sleepy depositors to the possibility of earning more on their money by moving it elsewhere. Several banks have been advertising high-yield savings accounts with rates between 4% and 5%, well above the national average yield of 0.25% for traditional savings accounts, according to Bankrate.com.</p><p>“The worry is that the events of the past few months are for banks what the pandemic was for Zoom use, once people were forced to figure it out,” said Stein.</p><p>Fed regulators are keeping close tabs on 20 to 30 institutions they see as more vulnerable following this spring’s banking turmoil. </p><p>Analysts worry more shoes could drop as the economy slows and defaults rise. Loans on office buildings, whose values have tumbled as remote work reduces demand for those properties, are seen as particularly vulnerable.</p><p>Banks lost deposits after the failureof Silicon Valley BankChange in deposits since January 2021*Source: Federal ReserveNote: Figures are seasonally adjusted and excludecertificates of deposit of more than $100,000. Largebanks are the top 25 institutions.</p><p>Even if banking problems appear to have settled down, “you’re still going to have failures,” said former Dallas Fed President Robert Kaplan. “You’re still going to need to merge a number of them.”</p><p>Any lending downturn could hit small businesses harder than large ones, which rely less on bank loans. Banks with less than $250 billion in assets are responsible for 70% of all lending to firms with fewer than 100 employees.</p><p>Kashkari said he wasn’t seeing evidence of a credit contraction in his Fed district, which includes much of the Upper Midwest. But his experience as a senior Treasury Department official during the 2008 financial crisis makes him recognize “these banking stresses are not necessarily completely behind us,” he said.</p><h3>‘Hanging onto the cliff with their fingernails’</h3><p>While strong inflation, job growth and consumer spending this spring might normally prompt Fed officials to increase rates at their meeting Tuesday and Wednesday, a possible lending pullback from banking strains offers a reason to hold off—a sign the separation principle has limits.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/f7ca5d2665887c949f4a64b8f0de3a4f\" title=\"Minneapolis Fed President Neel Kashkari, shown in 2019. PHOTO: JIM SPELLMAN/GETTY IMAGES\" tg-width=\"700\" tg-height=\"467\"/><span>Minneapolis Fed President Neel Kashkari, shown in 2019. PHOTO: JIM SPELLMAN/GETTY IMAGES</span></p><p>“Our tools can have separate objectives, but their effects are often not entirely independent…because financial and macroeconomic stability are so deeply intertwined,” Powell said on May 19.</p><p>While higher interest rates have been the immediate cause of banks’ losses, lowering short-term rates to reduce pressure on banks would backfire, said Randal Quarles, who was the Fed’s vice chair for bank supervision from 2017 to 2021.</p><p>That is because if inflation doesn’t fall, investors could demand higher yields on medium- and long-term debt to compensate for the risk that inflation erodes their purchasing power. This would be especially harmful for banks, which finance themselves with medium-term debt. “If you haven’t contained inflation, you will have the savings and loan problem all over again,” said Quarles, referring to the failures of hundreds of financial institutions in the 1980s and 1990s.</p><p>Fed officials have suggested that even if they forgo an increase this week, they could nudge rates higher at later meetings. That would give them more time to assess whether economic activity and banking sector conditions are unfolding as they expect.</p><p>“No model is going to say increasing interest rates in June rather than September is going to make a huge difference to the path of inflation, but if you raise interest rates and you already have a lot of embedded problems in the bank portfolio, you may end up causing a more severe recession,” said Eric Rosengren, who was president of the Boston Fed from 2007 to 2021.</p><p>Fed officials are split over whether to raise rates this week. Some worry the economy isn’t slowing down enough and aren’t as concerned about the banking problems. Steady income growth could provide the fuel that allows consumers and businesses to tolerate higher prices and continue spending.</p><p>Cleveland Fed President Loretta Mester in an interview last month said she doesn’t see a compelling reason to hold rates steady until the next move is equally as likely to be up as down. The Fed hasn’t reached that point yet, she said.</p><p>Failing to get a handle on inflation now means &#34;we&#39;re going to have to do a lot more later on, just like Paul Volcker did in the late &#39;70s and early &#39;80s,&#34; said St. Louis Fed President James Bullard at a conference last month. &#34;That&#39;s why I&#39;d like to err on the side of doing a little more here.&#34;</p><p>Bullard also cautioned against extrapolating SVB&#39;s problems to the entire industry because of its high concentration of uninsured deposits that funded a big portfolio of fixed-rate securities.</p><p>Others are worried more about raising rates too far and being forced to make a confusing U-turn to cutting rates if the banking crisis worsens.</p><p>Chicago Fed President Austan Goolsbee said last month&#39;s decision to raise rates was a close call because of uncertainty over how much the banking turmoil would curb lending.</p><p>&#34;We still fundamentally have to figure out the question of &#39;Is this as big of a credit stress event as, say, the S&amp;L problems in the late &#39;80s and early &#39;90s? Is this a temporary thing that is just a rebalancing of deposits from threatened institutions?&#39;&#34; he said in an interview last month.</p><p>Some former Fed officials who regret not raising rates sooner say the central bank should be more patient now. &#34;The Fed&#39;s policy is plenty tight. These things just take longer&#34; to run their course, said Quarles. &#34;Over the course of the summer, you&#39;re going to have a revaluation of assets as people realize, &#39;Oh my gosh, higher rates are going on longer than I thought.&#39;&#34;</p><p>Quarles, who is chairman of a private-equity firm, said he anticipates that will cause more distress for banks, insurers and other financial institutions &#34;that have been hanging onto the cliff with their fingernails, thinking that interest rates are going to start coming down.&#34;</p></body></html>\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{".SPX":"S&P 500 Index","BK4096":"电气部件与设备",".DJI":"道琼斯",".IXIC":"NASDAQ Composite"},"source_url":"https://dowjonesnews.com/newdjn/logon.aspx?AL=N","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2342150364","content_text":"Federal Reserve Chair Jerome Powell finds himself in a place no central banker wants to be: working to avert a credit crunch, which calls for looser monetary policy, while fighting high inflation, which demands the opposite.Strains in the banking industry, which followed the collapse of three midsize lenders this spring, help explain why some central bank officials are leaning toward holding interest rates steady at their meeting this week—even though the economy and inflation haven’t slowed as much as they expected.Fed officials don’t think a crisis is imminent, attributing recent troubles to idiosyncrasies at the three banks. But current and former central bankers say if stresses worsen, the Fed will face a more difficult trade off. Powell and his colleagues would have to choose between focusing on failing banks or high inflation.“They’re between a rock and a hard place. It’s a very, very tough situation,” said Raghuram Rajan, a former governor of the Reserve Bank of India. “You’re damned if you raise rates significantly more and put even more pressure on the banks, but you’re damned if you don’t” and inflation accelerates.One risk is timing: if inflation becomes entrenched in public psychology, becoming self-perpetuating, that could force the Fed to hold short-term interest rates higher for longer.“If inflation is going to fall quickly…we might be in a position to be able to cut rates, if not this year, then soon in the new year,” said Minneapolis Fed President Neel Kashkari in an interview last month. “But if, on the other hand, inflation is much more persistent and much more entrenched…then I think the stresses in the banking sector probably become more serious.” The economic expansion, the Fed’s credibility and Powell’s legacy are at stake. Powell was appointed to a second term as Fed chair in part because of his popularity in Congress, with his initial response to the Covid shock in 2020 and his handling of President Trump’s attacks earning accolades on both sides of the aisle.The past two years have been much rockier. First, the Fed misjudged inflation. More recently, the Fed’s performance on bank regulation has come under fire.Separation principleDuring the pandemic, the Fed signaled plans to hold interest rates at very low levels for years and purchased trillions of bonds to spur additional borrowing, and the government poured additional stimulus into the economy. The moves pumped banks full of deposits in 2021.As inflation hit 9% last year, Powell accelerated interest-rate increases because he and his colleagues wanted to stop an inflationary mind-set from taking root.By February, the Fed had increased rates by 4.5 percentage points in one year—more swiftly than any time in the past 40 years. Bank supervisors didn’t quickly spot how those rising rates had created a dangerous mismatch between some banks’ assets—securities and loans paying low rates—and liabilities—deposits and other borrowing with higher rates.That triggered a run on Silicon Valley Bank in March. The Fed and other regulators responded by backstopping the uninsured deposits of SVB and another bank that faced a run, New York-based Signature Bank, on March 12. They also agreed to lend to banks in general on favorable terms, putting money back into the economy.But with inflation still too high, the Fed’s rate-setting Federal Open Market Committee lifted rates on March 22. They raised them again in early May, to the current range between 5% and 5.25%, just days after regulators arranged a shotgun sale of a third lender, First Republic Bank, to JPMorgan Chase.A security guard monitored people outside a Silicon Valley Bank office on March 13 in Santa Clara, Calif. PHOTO: JUSTIN SULLIVAN/GETTY IMAGESIn making these moves, the central bankers were operating under their so-called separation principle: They use emergency lending and other regulatory tools to address financial instability so they can use monetary policy, primarily interest rates, to combat inflation.While emergency lending tools prevented other bank runs, they may not have fixed the underlying problem for some regional and midsize banks, whose long-term viability is threatened if higher rates force them to pay significantly more for deposits. Banks are facing losses on fixed-rate securities they acquired when rates were very low in 2021, though they don’t have to recognize losses if the investments are held to maturity. The Federal Deposit Insurance Corp. recently estimated such unrealized losses were around $515 billion at the end of March. That number would jump to well above $1 trillion if it included losses on low-yielding mortgages and other loans made when rates were much lower.Banks’ emergency borrowing from the Fed remains high, and an index of regional bank stocks is down 19% this year, though it has rebounded from a decline of 29% in early May. Surveys show banks continue to tighten lending standards as their funding costs rise and as they face the prospect of tougher supervision and regulation. A credit crunch could initially help the Fed by slowing the economy and easing price pressures, but the slowdown in credit growth could easily get out of control. Raising interest rates in such a scenario could be like smacking a ketchup bottle repeatedly—nothing comes out at first, and then the whole bottle suddenly empties all over your dinner.The conventional wisdom holds that rising interest rates are good for banks. While the value of their loans and securities declines, when rates rise, their deposits also become more valuable because banks don’t fully pass along higher rates to depositors.This assumes that depositors are unlikely to move their money in search of a higher yield—such as to another bank or a money-market mutual fund. If depositors are mobile, “then higher rates in general start to be pretty bad for banks,” said former Fed governor Jeremy Stein. The run on SVB risked waking up sleepy depositors to the possibility of earning more on their money by moving it elsewhere. Several banks have been advertising high-yield savings accounts with rates between 4% and 5%, well above the national average yield of 0.25% for traditional savings accounts, according to Bankrate.com.“The worry is that the events of the past few months are for banks what the pandemic was for Zoom use, once people were forced to figure it out,” said Stein.Fed regulators are keeping close tabs on 20 to 30 institutions they see as more vulnerable following this spring’s banking turmoil. Analysts worry more shoes could drop as the economy slows and defaults rise. Loans on office buildings, whose values have tumbled as remote work reduces demand for those properties, are seen as particularly vulnerable.Banks lost deposits after the failureof Silicon Valley BankChange in deposits since January 2021*Source: Federal ReserveNote: Figures are seasonally adjusted and excludecertificates of deposit of more than $100,000. Largebanks are the top 25 institutions.Even if banking problems appear to have settled down, “you’re still going to have failures,” said former Dallas Fed President Robert Kaplan. “You’re still going to need to merge a number of them.”Any lending downturn could hit small businesses harder than large ones, which rely less on bank loans. Banks with less than $250 billion in assets are responsible for 70% of all lending to firms with fewer than 100 employees.Kashkari said he wasn’t seeing evidence of a credit contraction in his Fed district, which includes much of the Upper Midwest. But his experience as a senior Treasury Department official during the 2008 financial crisis makes him recognize “these banking stresses are not necessarily completely behind us,” he said.‘Hanging onto the cliff with their fingernails’While strong inflation, job growth and consumer spending this spring might normally prompt Fed officials to increase rates at their meeting Tuesday and Wednesday, a possible lending pullback from banking strains offers a reason to hold off—a sign the separation principle has limits.Minneapolis Fed President Neel Kashkari, shown in 2019. PHOTO: JIM SPELLMAN/GETTY IMAGES“Our tools can have separate objectives, but their effects are often not entirely independent…because financial and macroeconomic stability are so deeply intertwined,” Powell said on May 19.While higher interest rates have been the immediate cause of banks’ losses, lowering short-term rates to reduce pressure on banks would backfire, said Randal Quarles, who was the Fed’s vice chair for bank supervision from 2017 to 2021.That is because if inflation doesn’t fall, investors could demand higher yields on medium- and long-term debt to compensate for the risk that inflation erodes their purchasing power. This would be especially harmful for banks, which finance themselves with medium-term debt. “If you haven’t contained inflation, you will have the savings and loan problem all over again,” said Quarles, referring to the failures of hundreds of financial institutions in the 1980s and 1990s.Fed officials have suggested that even if they forgo an increase this week, they could nudge rates higher at later meetings. That would give them more time to assess whether economic activity and banking sector conditions are unfolding as they expect.“No model is going to say increasing interest rates in June rather than September is going to make a huge difference to the path of inflation, but if you raise interest rates and you already have a lot of embedded problems in the bank portfolio, you may end up causing a more severe recession,” said Eric Rosengren, who was president of the Boston Fed from 2007 to 2021.Fed officials are split over whether to raise rates this week. Some worry the economy isn’t slowing down enough and aren’t as concerned about the banking problems. Steady income growth could provide the fuel that allows consumers and businesses to tolerate higher prices and continue spending.Cleveland Fed President Loretta Mester in an interview last month said she doesn’t see a compelling reason to hold rates steady until the next move is equally as likely to be up as down. The Fed hasn’t reached that point yet, she said.Failing to get a handle on inflation now means \"we're going to have to do a lot more later on, just like Paul Volcker did in the late '70s and early '80s,\" said St. Louis Fed President James Bullard at a conference last month. \"That's why I'd like to err on the side of doing a little more here.\"Bullard also cautioned against extrapolating SVB's problems to the entire industry because of its high concentration of uninsured deposits that funded a big portfolio of fixed-rate securities.Others are worried more about raising rates too far and being forced to make a confusing U-turn to cutting rates if the banking crisis worsens.Chicago Fed President Austan Goolsbee said last month's decision to raise rates was a close call because of uncertainty over how much the banking turmoil would curb lending.\"We still fundamentally have to figure out the question of 'Is this as big of a credit stress event as, say, the S&L problems in the late '80s and early '90s? Is this a temporary thing that is just a rebalancing of deposits from threatened institutions?'\" he said in an interview last month.Some former Fed officials who regret not raising rates sooner say the central bank should be more patient now. \"The Fed's policy is plenty tight. These things just take longer\" to run their course, said Quarles. \"Over the course of the summer, you're going to have a revaluation of assets as people realize, 'Oh my gosh, higher rates are going on longer than I thought.'\"Quarles, who is chairman of a private-equity firm, said he anticipates that will cause more distress for banks, insurers and other financial institutions \"that have been hanging onto the cliff with their fingernails, thinking that interest rates are going to start coming down.\"","news_type":1},"isVote":1,"tweetType":1,"viewCount":732,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}]}