Apparently Goldman thinks so. Possibly one at every meeting this year.
https://www.cnbc.com/2022/01/23/inflation-surge-could-push-t…
This may be the year value finally out performs growth.
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Possibly one at every meeting this year.
So where’s that Fed Put? What’s the strike price?
Given how extreme inflation is and how it is focussing their attention, I’d suggest not until the market is right back where it came from … as Jeremy Grantham (and many others) believe.
https://www.gmo.com/asia/research-library/let-the-wild-rumpu…
S+P 500 around 3,600?
That’s a further 20% drop.
Might well happen before they get to the 8th hike … certainly the bond market is skeptical with 10Y yield below 2% still … looking towards the imminent Fed induced recession.
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Hiking interest rates is not the only way to tame inflation. The much better way is to raise taxes on those making over $400k per year. The wealthy are causing the inflation.
"The much better way is to raise taxes on those making over $400k per year. "
Can you explain the mechanics of how you think that tames inflation?
Thanks
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That’s a further 20% drop.
Oh, so by next week at the rate we’re going…
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The wealthy are causing the inflation.
Larry Summers warned 11 months ago that the third stimulus was too large and that a “macroeconomic stimulus on a scale closer to World War II levels than normal recession levels will set off inflationary pressures of a kind we have not seen in a generation…”
And here we are.
DB2
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"The much better way is to raise taxes on those making over $400k per year. "
Can you explain the mechanics of how you think that tames inflation?
Sure for my sake keeping it simple...
Taxes act as part of the price of a good. If taxes at the pump are low in a given state people will buy more gasoline. When taxes at the gas pump are higher in another state people will buy marginally less, perhaps drive a more efficient car on average. When a tax comes off that means the producer can raise his or her underlying price and the public wont mind as much. It allows the collective wallet to spend more on the good when the tax goes down. The price can even overshoot the earlier price including the higher tax rate.
Another way of saying it, if the wealthy have a lot of income x per household on average, but they spend N trying to make sure to save, when taxes are low they can spend more and save. When taxes are higher on their income they spend less to save the same as prior.
Spending creates inflation. Producers eyeball what they can get and go for it. Which household spends more? A wealthy household spends more than an average household, answering the question. Average households are priced out of luxury goods. But that is not the only inflation happening to middle class families as a result of others having a great deal to spend.
Yet the tax structure is targeted against less wealthy people.
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