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Sven Henrich

@NorthmanTrader

Mar 10

Higher for longer. Right.
Banks already blowing up before they even got to their forecasted terminal rate.
At least in '07 banks didn't blow up until after.
You know there is a well established history of the Fed breaking things when they raise rates.
But it's always the timing.

Point is: Increasing the cost of carry from zero bound into the highest debt construct ever in record time has consequences & the collateral damage won't appear at first, but then suddenly cracks appear.
The soft/no landing narratives want to pretend these don't matter. They do.

Now: This can chug on for a while and even during the yield cure inversion result in big equity rallies in between, but it's ultimately the radical steeping after the un-inversion that the lag effects create the bigger cracks that lead to recession.

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Sven Henrich

@NorthmanTrader

Mar 10

When banks freak so do central banks.
Still think Powell will do 50bp with this going on?
Think again.

$BKX

Indeed the 50bp odds are already dropping like a brick from 80% odds at some point now down to 58%.

As the 2 year yield is reversing hard off of that negative divergence.

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Sven Henrich

@NorthmanTrader

Mar 8

So we had to endure dozens of Fed speeches in the last month setting expectations for 25bp & now Jay just flipped it to 50bp.
What, exactly, was the point of these speeches but to again result in total misguidance as they did with transitory before?

Now Bullard will again come out and babble on how much credibility the Fed has.
Give me a break, this is a joke.

That's why I have been saying for a long time: You can't listen to these people, their forecasts and guidance have no predictive value whatsoever. It's total misguidance.
How can you be so wrong and still be in the job?
And yet they keep doing it.

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Sven Henrich

@NorthmanTrader

Mar 7

Sen. Kennedy destroying Powell's soft landing fantasy with historical data that shows much higher unemployment (at least 7%) is needed to get inflation back down.
Powell not disagreeing with the data.

Most notable: Powell did not offer a single argument as to why it would be different this time.

Warren doing the same with Powell citing historical precedence of rising unemployment rising 1% within 1 year (using the Fed's own projection) resulting in recession 12 out of 12 times highlighting the Fed's no recession narrative is nonsense.

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Sven Henrich

@NorthmanTrader

Mar 7

Good morning markets.

updated

updated

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Sven Henrich

@NorthmanTrader

Mar 6

Nearly 400 PHD's at the Fed and this is what they kept peddling to the public with hundreds of Fed governor speeches from Powell on down brimming with transitory confidence.
Unfathomable.
How can this organization be collectively so wrong, especially when so many warned them?

twitter.com/i/web/status/1…

Median forecast for 2022: Less than 1%
Actual 2022: 4.33%

How is Fed "guidance" not anything but misguidance proliferated by hundreds of speeches.
If you don't know you don't know and keep quiet.
But to pretend you have some sort of knowledge and deceive the public with your… twitter.com/i/web/status/1…

What kills me is that they put out a less than 1% Fed funds forecast for 2022 in December 2021 while CPI was already nearly 7% & continuing to rip higher.
What intellectual quackery is that?
Seriously, I'd like to know.

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