RE:RE:RE:RE:Good AdviceI think what Candy was referring to was Powell's claim in the latter part of 2021 that inflation will be transitory and there's no need to increase interest rates. Then he did a 180 and started raising interest rates like crazy starting in early 2022 while admitting he was wrong about the transitory nature of this inflation and that it was indeed becoming a force that needed to be tamed by raising those rates, so what's to say he won't be wrong again / change his mind in the midst of the major tightening he's been up to over the past 10 months....?
There is a lag between when the Fed increases the Funds Rate and when that rate filters down through the economy and hits consumers and businesses and thus its impact on inflation, so some economists are warning that he's going too far in the other direction by engaging in overkill re. interest rate increases which may plunge the economy into a significant recession in 2023.
As you stated jay, we'll find out more soon. US November inflation rate numbers out December 13 followed by the Fed Funds Rate announcement the following day on December 14. The Fed has raised interest rates by 75 bps in each of the last four announcements. My bet is 50 on the 14th to take it to 4,25 - 4.50%. Anyone's guess after that as the Fed's next Funds Rate announcement won't be until February 1, so they'll have the December inflation numbers by then and will rightly take their time in analyzing what happens between now and the end of January before making that decision. Their stated goal is 2% inflation (October's numbers were 7.7% with core inflation at 6.3%), so the question is what terminal rate will take them to that inflation target as, again, a given rate hike needs to filter its way down through the economy before its full effects are felt on inflation and other economic numbers.
Small cap companies with high debt levels have been punished and I think will continue to feel it as higher and higher rates make their way to them. CTS is conducting a "strategic review" as we speak to check out what another entity might pay to take them out given their sizeable debt, and a number of other tech names had to request lenders relax debt covenants because they couldn't make payment and wanted to avoid default. Almost all lenders have been accomodating to date as they figured cutting these companies some slack with the hopes of eventually getting paid back their entire principle plus all outstanding interest was better than sending them into CCAA creditor protection.