I wrote earlier that the sooner the Fed hikes, the better. Here’s the opposing view from an anonymous colleague:

The FED is between a rock and a hard place. We are absolutely addicted to easy
money which has caused a very big debt bubble, to name just one side effect. The leverage in the marketplace is staggering. We have inarguable evidence of cost-push inflation. Oil has hit $40 per bbl. OPEC has been very intransigent up to the moment. Is this the time to start raising rates?

I gotta’ think not yet. First of all, there is a tendency not to take cost-push inflation seriously. As a matter of fact, I’ll bet they are pretty comfortable with cost-push because the thinking is that: a. the jawboning they are doing on higher rates has “worked” so far in that an awful lot of spec-monkeys have been shaken out of the commodities trees and b. as China cools, commodities prices will soften. Wasn’t this just mentioned by the Maestro? Absolutely. So there’s a hint right there. So maybe they are not so alarmed unless inflation gets to the demand-pull stage. (Ask the auto industry if they’re seeing any demand-pull. Yee-ha).

And as mentioned above about lack of wage growth, the ugliest form of all inflation, wage-push, is not even close to being an issue.

Last, do you think that Novak got the story about the first hike coming in the fall during a vision? There is about a 99% possibility that it was leaked to him with a goal towards becalming the markets by giving him a “schedule”.

Valid points all.

Category: Finance

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

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