Hong Kong News

Nonpartisan, Noncommercial, unconstrained.
Sunday, Apr 02, 2023

The Fed Wants You to Lose Money in Stocks and Probably Crypto, Too

The Fed Wants You to Lose Money in Stocks and Probably Crypto, Too

The U.S. Federal Reserve’s campaign against inflation might not be finished until you’ve lost money on bitcoin (BTC).
The reason why goes back to the basics of central banking. The Fed does what it does with monetary policy (these days, raising interest rates) and that filters through the economy by impacting, among other things, how much key assets cost – “financial conditions,” in central bank jargon.

For most of this year, Fed policy makers have been sanguine toward markets like stocks, preparing traders in advance (called “forward guidance”) for upcoming changes to monetary policy. But that seems to be in the past. In July, Fed Chair Jerome Powell announced that central bankers would stop practicing forward guidance.

“It’s clear the Fed wants to see tighter financial conditions, which include lower stock prices,” Brian Overby, senior markets strategist at Ally, wrote in a note.

And that probably means crypto, too, because crypto prices have been strongly correlated with equities. That’s likely unwelcomed news for crypto investors, who’ve already suffered deep losses.

Bitcoin is already down over 57% for the year to date, according to CoinDesk data, grappling with a broader crypto asset sell-off fueled by industry bankruptcies and a struggling global macroeconomic landscape.

The U.S. central bank has two mandates: price stability and maximum employment. Right now, prices aren’t stable, with inflation running well above the Fed’s 2% goal. Meanwhile, the unemployment rate is still low and employers are adding over 300,000 jobs per month. That’s great news for job seekers but, perversely, something that could fuel inflation, raising pressure on the Fed to take even stronger action.That spells potential trouble for markets like stocks and crypto.

“The Fed wants to create a reverse wealth effect and get people that own assets to rethink some of their purchase habits and maybe slow demand,” said Jim Bianco, president of Bianco Research.

“It’s a dangerous game,” he added. “You want the market to go down, but you gotta be careful when that starts to happen because if you get everybody running for the hills because they’re going to be the enemy of the market, you could turn it into a rout.”

Even though U.S. gross domestic product has contracted for two straight quarters, the economy seems to be in good enough shape to withstand continued aggressive rate hikes. Further signs of weakness, though, will test the Fed’s resolve and force policy makers to evaluate how much pain they want to cause in markets.

“It's very possible that [the central bankers] could very well cave once they're faced with some really bad employment numbers, but they haven't been so far,” Bianco said. “I don’t think they will but I completely understand that argument.”
Comments

Oh ya 204 days ago
You have been losing value in USD since Nixon closed the gold window in 1971.. There is a big difference between money and currency. Money is gold and silver and currency is that promissory note you have in your wallet. Best be holding so money when the shit hits the fan.. Remember during the great depression that a wheel barrel full currency would maybe buy you a loaf of bread. A oz gold coin could buy you a house

Newsletter

Related Articles

Hong Kong News
Close
0:00
0:00
Don’t Dismiss China’s Peacemaking Bid
Austrian Parliament members walk out when Volodymyr Zelensky begins speaking.
Father obliterates council members following viral TikTok of biological male masturbating in women’s bathroom..
Tsai Ing-wen received a "warm welcome" from the Chinese people in the US.
EU's von der Leyen: "We know this is an era where we rely on one single supplier. China. 98% of our rare earth supply."
China and Brazil have signed a new deal that will allow them to trade in their own currencies, bypassing the US dollar as an intermediary
Elon Musk and Others Call for Pause on A.I., Citing ‘Profound Risks to Society’
“We've had evidence prior to the pandemic that masks were largely ineffective at preventing community transmission of influenza “
Former Starbucks CEO Howard Schultz:
Former Starbucks CEO Howard Schultz rejects being labeled a "billionaire"
Jamie Dimon is being deposed over JPMorgan Chase role in Epstein lawsuits
Brand new security footage has just been released to the public showing the Active shooter Audrey Elizabeth Hale drove to Covenant Church School in her Honda Fit this morning, parked, and shot her way into the building
Social Media censoring users for saying the true
Smart Iranian fashion designer teaching dummy TV anchors lesson about reality
AMERICA, 2023
U.S. charges FTX's Bankman-Fried with paying $40 million bribe
Fallen 'Crypto King' Who Owes Millions to Investors Was Kidnapped and Tortured
Regulators blame social media for SVB's rapid collapse: 'Complete game changer'
AOC explains why she opposes banning TikTok
Singapore’s Prime Minister says China and US need to stabilize relations because world can't afford a confict between the two superpowers
In a dramatic U-turn against His Government: Judicial Reform Legislation Must Be Halted, Says Israeli Defense Minister Yoav Gallant
Gordon Moore, a co-founder of Intel Corporation, died at 94
Powell: Silicon Valley Bank was an 'outlier'
Bordeaux town hall set on fire in France pro democracy protest
Police violence in Paris
Paris: Some of the police are stepping down and showing solidarity with the protesters.
Donald Trump arrested – Twitter goes wild with doctored pictures
NYPD is setting up barricades outside Manhattan Criminal Court ahead of Trump arrest.
Credit Suisse's Scandalous History Resulted in an Obvious Collapse - It's time for regulators who fail to do their job to be held accountable and serve as an example by being behind bars.
Goldman Sachs cuts outlook for European bank debt over Credit Suisse crisis
Paris Rioting vs Macron anti democratic law
'Sexual Fantasy' Assignment At US School Outrages Parents
The US government has charged Chinese businessman Guo Wengui with leading a $1 billion fraud scheme that cheated thousands of followers out of their money.
Credit Suisse to borrow $54 billion from Swiss central bank
The BBC problem about China
Russian Hackers Preparing New Cyber Assault Against Ukraine
"Will Fly Wherever International Law Allows": US Warns Russia After Drone Incident
If this was in Tehran, Moscow or Hong Kong
Announcing GPT-4
TRUMP: "Standing before you today, I am the only candidate who can make this promise: I will prevent World War III."
China is calling out the US, UK, and Australia on their submarine pact, claiming they are going further down a dangerous road
A brief banking situation report
We are witnessing widespread bank fails and the president just gave a 5 min speech then walked off camera.
Donald Trump's asked by Tucker Carlson question on if the U.S. should support regime change in Russia?.
'No relation to the American SVB': India's SVC Bank acts to calm depositors amid brand name confusion.
Good news: The U.S. government is now guaranteeing all deposits, held by, Silicon Valley Bank, and the funds are available as of today
Silicon Valley Bank exec was Lehman Brothers CFO
In a potential last-ditch effort, HSBC is considering a rescue deal to save Silicon Valley Bank UK from insolvency
Saudi Arabia has announced a major breakthrough in diplomacy with Iran after two years of intense talks
Elon Musk Is Planning To Build A Town In Texas For His Employees
×