If you think the Fed chair, who was basically nominated by Trump to keep interest rates low, is going to raise interest rates unless he really, really has to, you’re an idiot.
Ahead of the Fed and BoE meetings this week, receiving front-end rates looks increasingly asymmetric.
It’s difficult to see a materially more hawkish outcome than what’s already priced (a very high bar for that), plus oil is now well past the peak of its move.
Macro for Dummies, by Dummies
Just six trading days ago, after the Nasdaq had already fallen roughly 8%, quite a few investment banks and well-known investors started raising caution flags on the market.
For instance, firms such as Bank of America and Citigroup, along with investors such as Steve Eisman of “The Big Short” fame, were warning about the risks ahead.
The concerns sounded convincing: no rate cuts, the $SPCX IPO valuation, capital raising concerns around $GOOGL, $META, and $ORCL, and a long list of other “red flags.”
Looking back, that turned out to be the bottom.
Including today’s pre-market action following the signing of a peace deal, the Nasdaq has rallied roughly 6% since then.
Now the response will be: “Well, nobody expected a peace deal.”
Exactly.
If the entire forecasting exercise is just extrapolating today’s conditions into the future, and the future almost never unfolds the way the present looks, what’s the point of doing it in the first place?
The only forecast with a perfect long-term track record is that markets tend to go up over time.
If someone asks what the market will do next week, next month, or after the next macro event, the honest answer is:
“I don’t know.”
The future is always shaped by variables nobody is talking about yet.
Ironically, the people on X who obsess over macro are usually the most clueless participants in the market.
They spend their days repeating assumptions, quoting each other, and recycling whatever happens to be popular on the timeline that week.
Very few have actually outperformed the market. Yet somehow they’re always the most certain about what happens next.