Is The Fed's Next Move A Rate Hike

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by Tyler Durden
Sunday, Feb 18, 2024 - 02:55 PM

Two months ago, when Powell shocked the world with his stunning dovish pivot when the Fed chair said that not only had rate hikes ended but that "policymakers had discussed timeline to start rate cuts" (and just two weeks after Powell said at the start of December that it was "premature" to even speculate on rate cuts), sparking a historic stock meltup, we said that this was absurd and ridiculous: either the Biden admin was goosing economic numbers to appear much stronger than they really were in a bid to make Bidenomics look better than it was (which they continue to do to this day) while the Fed was aware of the true sad state of affairs, or - even worse - the Fed was openly nudging stocks higher to push the election in Biden's favor. Meanwhile, with inflation still dormant and just waiting for the opportunity to pounce, any easing by the Fed would prove to be just as catastrophic to Fed credibility as the Arthur Burns Fed which eased in the 1970s only to unleash the worst inflation in US history.

It didn't take long for Wall Street - fully aware which way its bread is buttered - to enthusiastically get on board with the Fed's latest U-turn flip-flop (after all it would assure the bubbly stock meltup would continue for several more weeks of commission-generating profits), and an army of sellside strategists promptly threw away their former hawkish roadmaps and sided with the Fed's latest dovish reversal; indeed, the snapshot below from a Goldman Jan 15 report is indicative of the dovish frenzy that swept Wall Street in the past month: