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Question of the Week

The Fed is determined to wipe out inflation by any means necessary - even if it means destroying the economy.

Is there a better way?

Post your answer below.

Morning Commentary

A LONG TIME

By Charles Payne, CEO & Principal Analyst
1/10/2023 9:41 AM

Time keeps on slipping', slippin', slippin'

Into the future

Time keeps on slippin', slippin', slippin'

Into the future

I want to fly like an eagle

To the sea

Fly like an eagle

Let my spirit carry me

-The Steve Miller Band

I suspect after love and loss, the most written topic for poets, songwriters, and philosophers has been ‘time.’

When the moderator at the Atlanta Rotary Club asked how long he saw rates above 5%, Atlanta Fed President Raphael Bostic replied, “Three words: a long time.” He then added “I am not a pivot guy. I think we should pause and hold there and let the policy work.                                                                                                      

As the Fed gets deeper into its rate-hiking cycle, figuring out where they might be satisfied is becoming more difficult. There is no scientific rhyme or reason to decipher where the finish line might be. However, it’s not like calculating distance, time, and speed (see below).

The closest thing to a formula for the Powell Fed is to keep the pedal to the metal.

Jawboning the New Nuke

Once again, yesterday, a Fed official was about to derail momentum as the S&P 500 and Dow Jones Industrials gave up solidly to finish slightly lower. The Street is back to modeling three additional rate hikes.

This morning, Jay Powell speaks in Sweden right before the open.

There are additional economic reports this week including, the Consumer Price Index (CPI) and the University of Michigan Consumer Sentiment read, which includes the latest inflation expectations.

Heat Map

Five of eleven sectors edged higher on the day.

Not a lot to write home about other than green in the mega-cap.

Portfolio Approach

We added a new position in Materials yesterday in the Hotline Model Portfolio.

Today’s Session

Jay Powell is speaking at this moment in Sweden, and maybe, headlines will come out about the current rate policy.

It is interesting Powell is suggesting that in Powell’s 2.0, the social justice warrior will not be coming back.

Panel on "Central Bank Independence and the Mandate—Evolving Views"

First, the Federal Reserve's monetary policy independence is an important and broadly supported institutional arrangement that has served the American public well.

Second, the Fed must continuously earn that independence by using our tools to achieve our assigned goals of maximum employment and price stability, and by providing transparency.

Third, we should "stick to our knitting" and not wander off to pursue perceived social benefits that are not tightly linked to our statutory goals and authorities.

The markets are lower but off the pre-market lows.  


Comments
The Fed should slow down and wait for at least 3 months between rate increases. They are going too fast and I think they are going to cause a recession. More pain for the middle class! On another note, I have watched your 2PM program many times and the music they play when a commerical is coming up, is really too loud. Sometimes I can hardly hear what you are saying.

David Hays on 1/10/2023 10:21:33 AM
I think the Federal Reserve needs to continue to raise rates until Congress gets the message to stop with the huge spending bills that spend trillions of dollars on things that most people think are just plain wasteful.

David Lee on 1/10/2023 10:35:07 AM
love the music on your show....just right

robert john brush on 1/10/2023 10:40:37 AM
The Fed should wait and see how its interest rate hikes and "QT" are affecting inflation as well as the economy. Powell "under-did it" in the fall of 2021, and should not "over-do it" now. Perhaps he and his colleagues should just keep their mouths shut.
I note Jamie Dimon no longer predicted a "hurricane" this morning.

John on 1/10/2023 1:00:03 PM
The Fed is too far out in front and in danger of doing too much damage. There has to be a better way.

Ken Terry on 1/10/2023 1:28:59 PM
A "Soft Landing" requires a measure of fidelity that I don't see in the Feds actions so far.
More like Miley Cyrus and her wrecking ball.


Paul Krueger on 1/10/2023 1:38:16 PM
Great Point...and looks like they're having more fun than she did. CP

Charles Payne on 1/10/2023 1:40:56 PM
Maybe they should concentrate on their original objective and stop trying to manipulate our economy and financial system all the time...unsuccessfully I might add.

William Hall on 1/10/2023 6:11:27 PM
Yes silly. Drill for and transport more oil!

Leelee on 1/11/2023 9:13:33 AM
Biden is flooding the economy with huge amounts of money paying for the "socialist wish list" and the Fed is trying to suck it back out. The rich get richer because they get first use of the money and everyone else gets stuck with the high interest and growing bills. Until Congress starts controlling its desire to spend as much money as they can the US economy will continue being a dog chasing its tail.

Abolish the FED, the IRS, repeal the 16th and 17th amendments, campaign finance reform (can only donate to candidates that you can vote for ... NO MORE shopping all over the country for campaign donations, abolish PACs) and stop congress from investing in companies that allow them to profit from their vote, just to name a few fixes from a list of many. We have strayed far from the country our forefathers envisioned and that so many fellow Americans have sacrificed to protect.

The state of this country saddens this old Marine!!

John R on 1/11/2023 1:50:00 PM
By ANY means necessary? Does that include going to Congress and TELLING them that THEY are the root cause of inflation and that cutting spending (on self-promotion and other non-economy-growth endeavors) is the ONLY way to get inflation under control! Interest rate management isn't going to do it.

Steve K on 1/14/2023 1:32:17 PM
All the talk about reducing the labor force never seems to involve government employees. Powell can only harm employment in the private sector. Reducing government employment, getting rid of omnibus spending and the covid slush fund would re-balance the pressure on the private sector. Congress and the Biden administration are working against the Fed.

Steve H on 1/19/2023 11:05:46 AM
Reduce Federal spending by about 50%.

And not from defense.

Jeffrey J. Riddell on 1/30/2023 7:10:04 AM
 

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