#6901
Re: Inminente explosión segunda burbuja 2021-2022 - vivienda
Otra reflexión genial. Priceless:
The gap between economic reality and Fed (in)action has never been as wide as now since WWII. The Fed is pushing the monetary pedal to the metal while the economy is expected to grow by some 10% in nominal terms this year and still by 6.5% next year – the spread to interest rates at the front and long end is unprecedented. And still, markets expect the Fed to raise rates only in early 2023. Real (inflation-adjusted) housing prices are going through the roof and are now around bubble levels in late 2006. But the Fed continues to fire a red-hot market with monthly purchase of mortgage-backed securities of USD 40 bn.
The gap between economic reality and Fed (in)action has never been as wide as now since WWII. The Fed is pushing the monetary pedal to the metal while the economy is expected to grow by some 10% in nominal terms this year and still by 6.5% next year – the spread to interest rates at the front and long end is unprecedented. And still, markets expect the Fed to raise rates only in early 2023. Real (inflation-adjusted) housing prices are going through the roof and are now around bubble levels in late 2006. But the Fed continues to fire a red-hot market with monthly purchase of mortgage-backed securities of USD 40 bn.
Economists have learned to throw their textbooks into the dustbin. Old-schoolers may still look at the Taylor rule in order to get some sense about the distortion. Even with aggressive assumptions (neutral real Fed rate 0%, target core PCE 2,5%, NAIRU 4%, unemployment with higher beta), the rule would currently suggest a Fed rate of 1,5%. Recommendations could easily rise to 2,5%+ without stretching the assumptions.
Old world, for sure, the model doesn´t include S&P 500 or credit spreads where even minor deviations get a higher weight than anything else. The Fed is completely dependent on markets. With these many bail-outs in the recent 15 years the Fed is trapped by expectations the central bankers have created among investors. As they trust in ever-lasting monetary generosity and Robinhooders anyway don´t know anything else investors are positioned accordingly. And if the Fed tries to avoid long faces, which is more likely, the party will run further. But in contrast to the past this time the Fed policy is much more risky. Finally, the inflation beast could be released from the cage.
Se acabó la democracia. Aquí hay que hacer lo que digan los "mercados", que son las FAANG y otros cuatro, y el resto de los 7.000 millones de habitantes del planeta que se aguanten.
Se acabó la democracia. Aquí hay que hacer lo que digan los "mercados", que son las FAANG y otros cuatro, y el resto de los 7.000 millones de habitantes del planeta que se aguanten.