Tom Luongo bucks the consensus and says the Fed will keep tightening come hell or high water. From Luongo at tomluongo.me:
“There is no spoon” — The Matrix
“Ray, when someone asks you if you’re a god, you say YES!” — Ghostbusters
After the July FOMC meeting the headlines were abuzz with this crazy notion that the Fed ‘pivoted’ off of tight monetary policy.
They say these things because this is what they want. It’s the world they want, not the world they’ve got.
For nearly three weeks credit spreads, equity, bond and currency markets tried to convince us that the Fed had indeed done something it hadn’t done.
The commentary from the financial Twitterati and the headlines from the regime-controlled media tried desperately to spin a 75 basis point hike into a dovish event.
Financial commentary and its incessant chasing the news cycle and Overton window manipulation leads people down blind allies. It leads them to forget the first rule of watching a central bank:
Respond only to what they do, not what they say.
The fact is the Fed raised rates for a second time by more than most people thought they would raise total in this cycle.
Jerome Powell didn’t say anything anyone could have possibly, under different circumstances, construed as ‘dovish’ during July’s presser. But that didn’t stop the ‘experts’ from taking the ECB’s side and talking their own hedge books.
Eurodollar futures tried to blackmail the market into this false reality. Now it’s having to walk this back as the yield curve inversion has moved back to March from December. But, I want you to note the insanity of the Dec/Mar spread.