Everything is politics, including politics itself, investing, and the role of the Fed and its chair. Not really a surprise that after getting way behind inflation in late 2021/most of 2022 and embarking on the fastest/most aggressive rate hiking cycle ever, confidence in Fed chair Powell nearing historic lows. Heavy hangs the head that wears the crown.
The question that will need an answer later this year goes like this: with a recession in place, confidence in the Fed chair at historic lows, and the 2024 election season about to move into full swing, what has a greater probability of happening: additional rate hikes or the start of rate cuts?
I think we see rate cuts starting later this year.
P.S. The theatre that is the debt ceiling issue commences today. Nothing will come from these discussions and Congress will wait until the last nanosecond to cut a mediocre deal. They are 14 for 14 on that issue in the last 40 years. It’ll happen again. Kudos to Janet Yellen for pulling the drop-dead date closer. Her June 1 deadline genius will save us all from watching this circus all summer.
Source: Bloomberg data as of May 9, 2023
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