Carlsquare weekly letter: Does the Fed know something we don't?
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2024-08-28 08:28:00
As expected, Jerome Powell flipped from hawk to dove. We expected that. But we were surprised by the magnitude of the change. Now the market is pricing in a double hike and a long period of cuts. Why so sudden?
The answer may lie in the US presidential election. People overestimate the impact that the candidates will have on the market. This year, both candidates are talking about spending, so the difference between them will be very small from a stock market perspective
Could it be that Powell sees something we don't (like a looming liquidity crisis in the making), or is he simply positioning himself to be elected for a new term, as wicked tongues whisper?