Buy Everything Continues
Macro Perspectives: Thu 17 Jun 2021
Let's talk about the Fed meeting and what they see; Growth this year coming in at 7%, Unemployment falling to 4.5% (historically a level considered to be "full employment"), Inflation running at 3.4% (right around the long-term average).
All of this, and Jay Powell wasn't once questioned on why the Fed is still (right now) running an emergency monetary policy program. This program is explicitly structured to promote lending and investing and thanks to these policies, both investing and lending are at record levels.
So, given the Fed's own projections on the economy for this year, and given the achievement of its goals on lending and investing, it should be exiting these emergency policies, not in 2022 or even 2023, but now.
So what did the Fed do? They did nothing on the policy front (readers of my notes will know we are not surprised).
The consensus takeaway from the meeting and Jay Powell's press conference was considered "somewhat hawkish."
My takeaway, "somewhat hawkish" doesn't cut it. This meeting only pours gasoline on the asset price fire. Given the economic scoreboard we listed above, every day that goes by that the Fed continues to keep the pedal to the metal, the further the Fed gets behind on what will become an ugly fight against inflation.
With that, it has been a "buy everything" market since the Fed and Capitol Hill went all-in last year - flooding the economy with money, to inflate asset prices and deflate debt.
The "buy everything" market continues.