🔒 Boardroom Talk: Powell has killed off Mr Market’s beloved ‘Fed Put’ and ‘Immaculate Disinflation’

THE BIZNEWS PREMIUM PODCAST: Premium Briefing Ep 2 – Gearing up for the week with Alec Hogg: macro market insights; noteworthy local movers and a wrap-up of the best of BizNews

---

Last week US Federal Reserve chairman Jerome Powell lost patience with Wall Street. He instructed Mr Market to abandon fondly held ideas that would support a recovery in share prices. After ignoring many warnings, this time investors are listening – and acting as though we’re in for a hard landing for the world’s biggest economy resulting in a likely recession.

___STEADY_PAYWALL___

For years punters have relied on what Wall Street called the ‘Fed Put’, a presumed safety net thrown out by from Washington every time share prices fell too sharply. Despite persistent warnings from Powell and his co-governors that this time it’s different, Mr Market refused to believe it. No longer.

Also gone is the concept of ‘Immaculate Disinflation’, a widely held thesis that the US’s year-on-year inflation rate, now at 8.3%, would fall to just 2% in a year’s time. Reason: the end of clogged supply chains; lower energy prices; and the base-effect which means September 2023’s CPI works off the higher September 2022 number. But that belief, too, is history.

After last week’s 0.75% interest rate hike and, more importantly, Powell’s warning they will be higher still a year from now, Mr Market is finally getting the message. The Fed won’t stop raising rates until it is well and truly convinced the inflation threat has gone. It is not concerned about overshooting. An economic recession is regarded as the lesser of two evils.

* Don’t forget to join me for the interactive webinar at lunchtime tomorrow where we will be restructuring our BizNews Webtrader and Shyft portfolios. Only for Premium members. Click here to register.

More for you to read today: 

• Eskom: Crisis, what crisis? William Saunderson-Meyer says that as SA fumes in the dark there is no sign of the ANC doing anything differently.
• When Bad Things Happen to Good Stocks. Investing in quality stocks seems like a smart move—but the bet on the blue chips hasn’t paid off lately. 
• Russians Seek to Mount Resistance to Putin as Mobilization Gears Up. Some activists are staying in the country and protesting, despite threat of prison or a draft summons that could send them to the front lines.
• Italy’s Election Front-Runner Sheds Far-Right Image, Courts the West. Giorgia Meloni has distanced herself from nostalgia for Mussolini and campaigned as a conservative whom Italy’s allies needn’t fear. 

---

NB FOR YOUR WALL STREET JOURNAL ACCESS…

As a Premium subscriber you are entitled to full membership of wsj.com (normal price $29 a month). Be sure to action your access through the Premium link on the BizNews website. Because of The Wall Street Journal’s credential requirements, be sure to create a password which has at least 8 characters and includes at least one letter and one number – NB it MAY NOT contain any special characters (ie #, !, @ etc). To maintain access to WSJ.com, you MUST enter our partner’s website via Biznews Premium at least once a month. A final PS, if you had previously signed up for WSJ you’ll need to clear the cookies from your device. Our helpdesk can assist –[email protected].