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Pre FOMC Market Set Up for Anything - 1/31/23

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45 minutes ago, TurdButter said:

If the Fed wants to really reverse inflation, which has been heavily concentrated in financial and real estate assets for 25+ years, it will HAVE TO 'surprise' the markets sometime, beyond the J hole mild rebuke.

There's also been a theory,among some non-affiliated anal cysts, that the Fed, especially Powell, wants to not only destroy the 'Fed put' but also substantially loosen the relationship between the real macroeconomy and the markets. 'Surprise' needed for this too.

To do the above, they'd need a 50 bp rate hike, a 50% increase in QT pace and a verbal throat punch of the equity and credit market. 

Buy more gold if not.

The Fed merely follows the market on rates. It doesn't dictate rates by dictum. It influences rates by directing the supply of money. The other side of the equation is demand for credit. And it will be sharply reduced in the months ahead due to the debt ceiling. 

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Well. I had some recovery today. Push comes to shove tomorrow.

On that note, from nice Nice France, I bid you bonne nuit et bonne chance! 

 

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10 minutes ago, DrStool said:

The Fed merely follows the market on rates. It doesn't dictate rates by dictum. It influences rates by directing the supply of money. The other side of the equation is demand for credit. And it will be sharply reduced in the months ahead due to the debt ceiling. 

When demand for credit goes down, banks lend less. So less money is created and the economy can‘t grow. This could only be offset by the FED starting QE again, or some type of it.

so under these circumstances Poopwell normally would have to announce at least a pause im balance sheet reduction. As we know the FED made many mistakes in the past, so why not tomorrow? 

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21 minutes ago, TurdButter said:

How does the 90 day bill rate vs Fed Funds look now? Haven't seen that chart for some time.

And equity, bond and real estate prices remain inflated vs earnings,dividends,coupon rates and incomes. Still plenty to squeeze out there.

gold is overrated. even own BTC, its better.

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1. Inverse H&S - check

2. Break out from the bear trendline - check (but could turn into a fakeout)

3. Forming a higher high -- in progress (needs to move above 4177 to check this point)

4. Recent poll -- 65%+ think the breakout is fake and new lows are ahead

20230131_233630.jpg

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