Jawbones on parade

As the market rises, Fed jawbones emerge on cue

But it’s more than just stocks, check out the 2yr yield below. That’s the real driver.

You see, into the last FOMC meeting we had our stern warnings about speculating in the inflationary playground that the Federal Reserve cooked up in 2020. NFTRH (and NFTRH.com for that matter), ever on the job, called for this rebound from unsustainable over-bearish sentiment.

This post, noting in real time (as opposed to revisionists getting brave now because the herd is getting braver) that the VIX was at risk of a hard pullback (market likely to make a sharp rally), was made during the most intense phase of the spike in fear.

What’s more, NFTRH even established targets for the VIX on the downside and SPX, NDX and SOX on the upside (premium update still password protected). It’s all coming together now.

And on cue, the Fed jawbones are out and looking as comical as ever. I just laugh because of the ‘on cue’ aspect of this. They are a clown patrol and today Cleveland Fed head Loretta Mester wants us to know that each FOMC meeting is going to have rate hikes in play. Earlier today another Fed talking head was jawboning. Atlanta Fed head Bostic was out with a similar message just this morning.

Nah, there’s nothing coordinated going on here. Move along, it’s just normal people feeling they have something to say to the financial media for whatever reason on this particular day that sees the markets recovering strongly from the FOMC angst of just a couple weeks ago.

Now it’s up to the market to either flip the Fed the bird from here as this macro chart implies it may do (if past is prologue prior to and well into rate hike regimes) or put on a ‘different this time’ exhibition. In the last three examples the stock market did not top until long after the first hike and the 2yr yield (which is the thing that is actually jerking the jawbones into action) started to negatively diverge.

Meanwhile, you can see that the 2yr is telling these clowns to get the hell out there and jawbone! More to follow, I am sure.

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