Market Observations
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Started by joj - Sept. 23, 2022, 3:52 p.m.

June lows are in the cross hairs in the S&Ps.  I am not strongly opinionated directionally but the mantra "don't fight the Fed" is keeping me out of trouble.  

Midterms are often a good time to buy into stock market softness.  So my criteria (or one of them) is relative strength.  As June lows get taken out (or at least tested) I look for companies whose stock price is NOT taking out or testing the June lows.

Crude oil now below $80 for the first time since before Putin invaded Ukraine.  Any guesses why it is breaking???

MM, please move this to TR.

By metmike - Sept. 23, 2022, 6:25 p.m.
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Wonderful topic, joj!

Exxon CEO Darren Woods says the cure for high prices will be high prices

The cure for high prices is high prices

Further, given that markets are forward looking the cure for high prices is predictions of high prices. The predictions themselves moving the efforts back through time as people now act to capture those potential profits in the future.

By the time the bureaucracy gets to hear about it everything has already happened.

By metmike - Sept. 23, 2022, 6:30 p.m.
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History shows high energy prices could drive us into recession

by Marc Joffe, opinion contributor - 04/01/22

Rick Santorum Is Right: Gas Prices Caused the Great Recession

By Derek Thompson

By metmike - Sept. 23, 2022, 6:38 p.m.
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Fed Critics

Started by joj

"The economy is NOT getting overheated or in need of cooling down for the typical reasons. This time, a big part is from energy and supply chain issues that MUST be resolved.

Using higher interest rates? A great case could be made before the pandemic and before the energy crisis for that exactly.

The market before early 2020 could have been modulated by the Fed using conventional, interest rate strategies.

The Fed is not to blame for the dynamics leading up to this either, however it seems clear that the Fed can make it worse by hiking interest rates in a rapidly contracting economy and probably have already pushed into that realm.

The well understood  problem is that there's a lag time of many months to observe the economy AFTER Fed decisions. By the time we see the impact of bad decisions, it means the evidence of REAL damage has been incurred to the economy that will continue with a lag time until adjustment impacts might kick in.

I get that the economy was extremely overheated in several key metrics earlier this year and why the Fed acted as it did(while waiting an awfully long time)

Those have peaked and the rate of change is following an extremely steep curve because of unprecedented dynamics that include energy(crisis in Europe), supply chain, COVID, China, war in Ukraine.

So making wrong decisions.......will  have amplified consequences in this environment. 

If the Fed had aggressively tightened a year ago, would we be better off right now?

Very likely in some realms and the signs were certainly there to act sooner.  But now we have some strong signals of a  retracting economy and all these very mixed signals in a complicated world.

In commodities, the saying is "The cure for high high prices"

When energy prices soar as high as they did earlier this year, they act to increase prices on everything, which helps stifle the economy. in 2008.........which is now happening.

The Fed should know this and the lag time for that to hit the economy,. However there's so much going on that complicates it."