Retiring Chicago Fed President Charlie Evans spoke during today’s US session, setting the tone for what was largely a risk-off session with stocks in the red and the US dollar moving higher.
Evans comments were consistent with the Fed’s stance that they will continue to lead rates toward restrictive levels. This includes 4.5% inflation by the end of the year and 4.75% in the first quarter.
To the market is certainly seems that the Fed will then pause to see what happens. Should we see the Federal Reserve inflation topping 5 % then the market could really sell-off as the limit continues to be raised.
Fed member Evans said today that the “Fed needs to see inflation coming down” and “inflation is much more persistent than the Fed thought it would be”.
He also added that “JOLTs data is trending in the right direction, but vacancies remain high” and that he is “still waiting for convincing evidence that inflation is.”
Legendary trader Paul Jones also spoke today. The market does pay attention to what he says because he has been so right about previous trend cycles.
Jones said that is a “very challenging situation for the Fed” and that “consequences of Fed rate hikes yet unknown. The market did not move on his comments.
The legendary trader said that “we need stable inflation over long-term if we don’t have a stable society and that “there is a short-term pain if we are to have long-term gain.”
On Russia and Bitcoin, he said that “Putin/Russia situation a big unknown” and that “I have a minor allocation of Bitcoin” and “Bitcoin will have value at some point.”
He said that “Most recessions last around 300 days. Stock markets tend to go 10% from the start of the recession.” And “There will be a point when the Fed stops tightening.”