Stock Market Update Q1 - Bank Failures
Now the fun part - when you realize how hard it is to predict the future!
Now we are faced with countervailing forces:
1. The Fed's state goal of decreasing inflation to 2%
2. Large public banks going insolvent needing are back-stopped to avoid contagion
This kind of "uncertainty" is normally bad for stocks, but longer-term followers of the market are also confused by the "Bad news is good news" era in finance where the game appears to be largely played on the largess of central bank Monetary Policy.
TBH I like many of the people I follow in finance feel uncertain.
"Slower economic activity" should mean lower stock prices
"Crisis economic activity" means higher stock prices due to accommodative Central Banks
In 2022 - the Federal Reserve raised it's interest rate 6085% - www.macrotrends.net/...ate-historical-chart
The average Fed Funds rate since 1954 is 4.6% (which is where it is today) - if the goal is inflation < 2% sitting at least at the long-term average seems sensible until it is below that rate, so the layoffs will continue.
Now we are faced with countervailing forces:
1. The Fed's state goal of decreasing inflation to 2%
2. Large public banks going insolvent needing are back-stopped to avoid contagion
This kind of "uncertainty" is normally bad for stocks, but longer-term followers of the market are also confused by the "Bad news is good news" era in finance where the game appears to be largely played on the largess of central bank Monetary Policy.
TBH I like many of the people I follow in finance feel uncertain.
"Slower economic activity" should mean lower stock prices
"Crisis economic activity" means higher stock prices due to accommodative Central Banks
In 2022 - the Federal Reserve raised it's interest rate 6085% - www.macrotrends.net/...ate-historical-chart
The average Fed Funds rate since 1954 is 4.6% (which is where it is today) - if the goal is inflation < 2% sitting at least at the long-term average seems sensible until it is below that rate, so the layoffs will continue.
