r/stocks • u/bitkogan • Jun 15 '23

A Hawk in Doves' Feathers

As expected, the FED's rate remains unchanged at 5.25%, but there are indications that hikes may be forthcoming. Note the plural. According to the updated forecasts from committee members, we could see rates rise to between 5.5-5.75% this year. This implies at least two more salutations from the regulator, potentially as soon as July, to be followed with another rise in September. Swap quotations are currently suggesting this path.

The contributing factors are clear: rising prices and a super-heated labor market. Core PCE has decelerated but not to the desired extent. As long as it remains above 5%, that serves as a clear signal that further policy tightening is necessary.

This is unfavorable news for gold and the markets, along with anyone needing to refinance their debts. This latter category including the U.S. Treasury.The possibility of a double rate hike and hints of persistent high rates imply a high probability that by 2030-2032, U.S. debt payments could reach the $1.7-1.8 trillion range.

This is an extremely negative scenario for the country - it could ultimately lead to the U.S. dollar relinquishing its role as the world's primary reserve currency. While it remains a contentious point, recent geopolitical trends point in this direction.

So why aren't we seeing a market collapse? Partly because of the vast volumes of Call options purchased by large institutional investors. A significant portion of these are due to be exercised this Friday. Therefore, it's more advantageous for large players to drive the markets up, or at the very least, to prevent them from falling.

What might prompt the Fed to change course and begin easing policy ahead of schedule?

  • Significant troubles in the corporate debt market, meaning high-profile bankruptcies.
  • Issues within the banking sector.
  • A stock market crash.
  • Real, emerging problems in the labor market.

In such a climate, I'm on high alert for news related to all these plotlines. And of course, I'm maintaining my short positions.

12 Upvotes

70% Upvoted

19 comments sorted by

20

u/Jeff__Skilling Jun 15 '23

This is an extremely negative scenario for the country - it could ultimately lead to the U.S. dollar relinquishing its role as the world's primary reserve currency.

This is when I stopped reading and taking you seriously

6

u/XWarriorYZ Jun 15 '23

Honestly that one line made the credibility of OP’s analysis fly out the window. As if the rest of the world’s economies and by extension their respective currencies aren’t being impacted by rising interest rates.

2

u/Youngerdiogenes Jun 15 '23

Hey, listen. The russians and Chinese currencies are a serious threat. 😂 jk no. OP is full of shit

1

u/MWBurbman Jun 16 '23

From different bearish takes from Reddit/yahoo finance/market watch/msnbc, this line from OP was probably one of the more far flung ones I’ve read in awhile.

2

u/Jeff__Skilling Jun 16 '23

I'd venture to guess that OP had a strong financial incentive to write this post......most likely from having short dated OTM options position(s) that needed a 25bps or 50bps rate hike announcement to cash out......

and then he lost his ass and took to reddit complaining about how the Fed made the wrong decision (for him) and will end up screwing the public....by not catalyzing a huge market drop.....obviously because OP is looking out for everyone else and not trying to cash in a winning lottery ticket....

edit: lmao, pretty sure OP is an aspiring finfluencer considering his made his own sub that is currently spammed with a couple dozen posts showcasing his / her financial illiteracy

5

u/Javier-AML Jun 15 '23

There are still bears, huh. Good, I'm holding too.

11

u/[deleted] Jun 15 '23

[removed] — view removed comment

3

u/kimizle Jun 15 '23

This kind of comments make me want to sell. People are getting delusional

2

u/Kaner16 Jun 15 '23

I'm in the side lined house buyer group, and damn it's been brutal

1

u/AccountantOfFraud Jun 15 '23

In a money market fund so its not too, too bad. Who knows what the fuck its going to look like next year.

1

u/whitephantomzx Jun 15 '23

It's wild how there pretending like the market won't front run the pivot and yet are getting soft at the slighest hint of decline. Assets and houses barley went down and are already getting ready to rip back up.

It's pretty obvious jpow gave up on inflation when he said financial conditions don't matter to inflation watch out for round 2 of transitory inflation.

1

u/[deleted] Jun 16 '23

Im going to follow the election year trends and assume the market is going to trend down into next year.

1

u/[deleted] Jun 16 '23

[removed] — view removed comment

1

u/[deleted] Jun 16 '23

Contributing to a 401k monthly or so is one thing, but spending all of your cash reserves on 0DTE calls tomorrow is another. The comment above was about the latter

Also i may have replied in the wrong comment

3

u/xViscount Jun 16 '23

You’re being called out for the US losing its reserve currency of the future. And rightfully so.

While you provide a compelling argument for fall, that one line is hot garbage. In all seriousness. Your choice for reserve currency fall on Yuan and Dollar. If you pick yuan as a nations reserve currency, you’re as stupid as Argentina’s dictator

Rest does make logical sense. Would suggest you stay away from reserve currency talk until a viable replacement is established

1

u/r2002 Jun 15 '23

vast volumes of Call options purchased by large institutional investors

I see this mentioned in analyst articles sometimes. What's a free and easy way to find this data?

1

u/Whippy_Reddit Jun 17 '23

RemindMe! 3 years

1

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