I was astonished to see the stock market rise 3% yesterday after Fed Chair Jerome Powell announced that the Federal Reserve is raising the fed funds rate by 0.5%. Why party when the punch bowl is being taken away?
Well, today the market is suffering a hangover. It’s dropping the way I expected it to yesterday. At the time I’m writing this (3:14 EDT), the DJIA is down 1,269 points (3.73%) and the NAZ is down 5.72%. Bitcoin is down 7%.
I expect the markets to continue to fall as margin calls arrive and the good is sold with the bad. There has been a lot of volatility lately, with up and down days alternating. But I think that Mr. Powell has made a convincing case that this time he really means it. The Fed will raise rates at least twice more this year. They are serious about controlling inflation.
I don’t think that Powell will chicken out the way he did in late 2018 when he backed off after the markets had a hissy fit.
Have a glass of the hair of the dog and hold onto your hats. I think we will be seeing less partying and more hangovers from now on.
… there should have been no major reaction either day.
Correct. We have been told, for decades, that the market is a “future discounting mechanism”. The rate increase should have been “priced in” weeks ago. Nope. We got hysteria to the upside. Then the next day, hysteria to the downside.
Does anyone waste their time watching bubblevision anymore? They clearly have no clue, just feeding the hype and hysteria.
Thank you for recommending this post to our Best of feature.
As offered before, the markets, like the media, run on hype and hysteria.
Steve…likes everything he holds, they have decent balance sheets, they all pay divis.
I must confess that all the people who were concerned about me starving to death in my dotage because of holding on to oil, Nat gas and pipelines (all good dividend payers) can relax now? I just bought my wife a brand new mini-PC as her Mother’s day present for Sunday. We are invited to the WAG (high end Halifax Yacht Club with superb food) by daughter and her family.
Lots of whining on Canuck TV news about C$2 a liter gas, good news for my guys and my Micra only needs a half a tiny tank once a month or so.
I expect the markets to continue to fall as margin calls arrive and the good is sold with the bad.
Wendy,
I do not think it is margin calls. When a market dumbs over a period of time the margin is not called any longer. The brokers simply close your position. No warning nothing. That has already happened.
The problem is probably China, the institutions maybe cashing out to cover up their China based problems.