It was a bit of a surprise they didn't already do it. Most people expect rates to go up at the next FOMC. Inflation is moving up, mostly due to the Iran War related oil crisis.
Fed's Kashkari says 'now is the time to start slowly moving' rates up
21–30 of 60 posts
Re: Fed's Kashkari says 'now is the time to start slowly moving' rates up
#22> Corporate earnings are through the roof. They’re doing great. The consumer is hanging in there. The labor market is hanging in there. Are we though? Thank god corporate profits are ok...
Don't corporate profits depend on the 99% (the poors) spending? If the consumers fail, and stop spending, how long before the corporations feel mildly inconvenienced?
> Don't corporate profits depend on the 99% (the poors) spending? If the consumers fail, and stop spending, how long before the corporations feel mildly inconvenienced?
50% of consumer spending is by the top 10%, and that trend is getting more extreme as wealth concentrates further. Is there a breaking point? Sure. But capital is willing to see how far it can push this before it breaks.
Re: Fed's Kashkari says 'now is the time to start slowly moving' rates up
#23Earlier quoted context omitted.
Don't corporate profits depend on the 99% (the poors) spending? If the consumers fail, and stop spending, how long before the corporations feel mildly inconvenienced?
Well, actually they have a new model. I call it the "Apple" model. Low volume sales on high value items where you can charge more. Even NVidia has moved to this model: make your money from selling high-end GPUs for Data Centers and forget the low-profit margin (GeForce) GPUs for gamers/consumers. The whole economy is moving to that model for many things.
Auto sales, airline ticket prices (notice the expansion of 1st, business, and comfort class seats), etc.
Re: Fed's Kashkari says 'now is the time to start slowly moving' rates up
#24Re: Fed's Kashkari says 'now is the time to start slowly moving' rates up
#25I feel the mortgage rates are a bit too high now. Anyone else?
The problem for mortgages is that the headline rate (30 year fixed) was historically low for almost the entire period 2009-2020, as the economy slowly struggled out of the Great Recession and then the rates went absurdly low during the Covid recession. That meant that a lot of people locked in mortgage rates that are impossibly low (including me) and going back to more "normal" rates- the current rates are a little lower than what was available in the period 1993-2008- feels high to people. And so many people locked in those low rates (either purchase or re-fi), can't get those low rates on a new house, and so feel locked into their current home, which is serving as an anchor on the entire real estate market.
But you can see this pattern here in FRED: https://fred.stlouisfed.org/series/MORTGAGE30US
Re: Fed's Kashkari says 'now is the time to start slowly moving' rates up
#26Re: Fed's Kashkari says 'now is the time to start slowly moving' rates up
#27> Corporate earnings are through the roof. They’re doing great. The consumer is hanging in there. The labor market is hanging in there. Are we though? Thank god corporate profits are ok...
Could you point to some evidence that we are not? Or at least an anecdote or an opinion on what the issue is or anything at all of substance rather than a provocative question and a bit of snark? What am I supposed to take away from this- I don't even know whether 'we' refers to the consumer or participants in the labor market
[dead]
Re: Fed's Kashkari says 'now is the time to start slowly moving' rates up
#28Yen carry trade unwind, inflation in Japan, hit to the NASDAQ, AI bubble pops, Japanese investors pull money back home and Treasuries lose its largest foreign creditor. Who knows what happens next.
[dead]
Re: Fed's Kashkari says 'now is the time to start slowly moving' rates up
#29> Corporate earnings are through the roof. They’re doing great. The consumer is hanging in there. The labor market is hanging in there. Are we though? Thank god corporate profits are ok...
Don't corporate profits depend on the 99% (the poors) spending? If the consumers fail, and stop spending, how long before the corporations feel mildly inconvenienced?
Not this quarter, and this quarter matters for bonuses! What happens with the next quarter is a "then-problem".
Same for politicians, 4/5 years matter, if the world collapses after, it's the next governments problem.
And in financial terms, those are really long periods, at least compared to HFT.
Re: Fed's Kashkari says 'now is the time to start slowly moving' rates up
#30Rates up, rates down, I'm so confused. Too much liquidity supposedly means inflation, too little liquidity means deflation. Would not lower rates mean more consumer spending, thereby injecting more spending and fluidity in the system? I can't help but shake the feeling that the federal reserve is here for the wealthy, the bankers, and not for the rest of us, and anything they do is ultimately not for our benefit, but…
> Would not lower rates mean more consumer spending
> the feeling that the federal reserve is here for the wealthy
In a sense, the disconnect between these two things is also the explanation. The behavior of consumers is not directly coupled to the fed rate. What you or I do with our money won't change if the rate goes up or down a percent, because we just don't have enough money for it to make a difference to our daily life.
But it often takes a loan to start a business. And when the bank is considering who to make loans to, higher fed rates mean they need to charge more interest, which means riskier business proposals don't get funded. Conversely, if the fed rate is low, then the only way for banks to make money is by making loans, so there's more money available, which tends to both increase inflation and decrease unemployment.
The fed has two jobs (keep inflation at ~2%, and unemployment no higher than 5%) and one lever to accomplish both. It's not so much that they only care about the wealthy, but rather that their only tool needs to percolate through the wealthy before it affects us.