|Nice shoes, Bob.|
Let's consider Alisdair Macleod's macro analysis, which suggests that we see a spike in the CPI by the second quarter, which forces the Fed's hand (to raise again), in my opinion, at the June meeting.
To get there, we would have already had 3 Fed meetings where essentially nothing was announced, at the end of January, in mid-March, and in early May. Each of these meetings would leave the policy and schedule unchanged, but only the March meeting would be received as bullish, as it alone has the follow-up press conference, the sort of meeting where raises are normally made. The January and May meetings, although not hiking rates, by leaving the Fed balance-sheet reduction schedule unchanged, would each be received as super-bearish, resuming the selling.
The only thing that matters now is Federal Reserve monetary policy, not China, not Europe. And if Macleod is right, in 2019 Fed members will find themselves trapped by actual price inflation following in the wake of the flood of loose credit.
All through next year, we will witness a crescendo of calls from the desperate FIRE sector for the Fed to cut rates again and roll out QE4. But this cannot happen until the markets are wrecked and ruined, deflated, when the Fed finally has the freedom to intervene. Longer-term, we're looking at a debt jubilee and large-scale refactoring of our late-cycle civilization, wiping out all of the unsustainable liabilities. Our credit-money system, political economy based on usury, can only stand so many trips to the well before faith runs out. Maybe the survivors can discover honest money one day.
Even with a month of sideways, we could finish the entire bearish crash cycle well before the 2020 elections. What a hoot that will be!
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