Friday, September 30, 2022

Stock Market Snapshot (video)

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  1. Thanks for this great video!
    I have a question about China. China is preparing to pop up its yuan by massively dumping dollars in the market. How well that affect the dollars? Would that cause instability in the US economy? Would that help inflation?
    In addition, employment numbers are out next Friday and Fed Mester will talk next week. Fed Mester scares me. She is more Paul Volcker than Fed Powell himself. Do Fed Mester's words mean anything? Her words in 2018 didn't matter and did not affect Fed Powell decisions in 2018.

    1. Great questions Sam. So, countries stepping in unilaterally to stem the fall in their currencies tend to succeed only over the very short-run, but we shouldn't discount the effort, it says something serious about the potential aim of policy going forward... Coordinated efforts with other countries (a la The '85 Plaza Accord) have more oomf, obviously... To the extent that it takes the dollar lower, it would ostensibly be positive for the US market... The rising dollar is causing mass instability on a global basis... Where China is set to do something potentially sustainable comes after next month's 20th National Congress... We're looking for a notable relaxing of the covid-zero policy (the fact that the plan is not being mentioned of late and recent developments in Hong Kong support that notion), and some serious stimulus being brought to bear (yesterday, in fact, the Chinese government decided to allow cities to reduce, or remove, the lower bound of mortgage rates for 1st time homebuyers), which would be net positive for the global economy...

      With regard to Ms. Mester, or any of the Fed governors, their words absolutely move the market these days... On Tuesday stocks appeared to pop higher when Evans said he's "getting a little nervous about going too far, too fast with rate hikes."... Other than that, it's been easy to tie some of the intraday weakness to hawkish Fed commentary... The Hawks clearly rule the roost currently.