Suncor Energy Inc T.SU

The US Fed Raises Interest Rates

[Experienced]

Short commercial/brag

Those of you that follow my posts know that many many months ago I predicted a US Fed finds rate of between 5.5 and 6% when the rate was in the 3s.  Well we are now at 5.25% and inflation in the US is still well above the Fed target rate of 2%.

Soooo...where are we now?

As I have said before (I am not a renowned monetary theorist) monetary experts have said for decades (dating back to my days as an Economics grad student - as my wonderful wife would quip - a 100 hundred years ago...lol), there is a long lag between the interest rate hikes and the actual effect of the change.

IMO....the lags are starting to take effect we are getting very close to this point.  Witness all the layoffs..not only that Obscure has talked about in the auto industry but also elsewhere.  So another 250- 500 baisis points is a reasonable forecast.

Soooo..the big question...where does that leave us?

In short - my scenario isthat, as my smart wife would say "the ducks are lined up" for a recession later this year.

Why?

A few things..

1...we already seen in the US 3 bank failures

2...consumer debt to deal with inflation has risen to levels that a few years ago would have been considered "beyond the pale"

3.. the "compromise" on the US on the debt limits to get an Agreement will result in less federal stimulus spending

This is to name just a few.

The message?

As before...


Be careful and keep some dry powder in your portfolio....this could be the best decision you make.

Will it happen tomorrow?

Naw...not likely

In a 4-6 months?

Yep!!

[mrbb]

as for the oil/gas sector, i'm way more concern about the effect of macro economy than from EV, solar panel and windmills. 

[Obscure1]

I think you meant 25 -50 basis points. Based upon JPow's comments today, I think any potential banking crisis is behind us as the safety net has held.  JPow's explanation about how the tightening in the financial industry is assisting the FED likely means we have likely seen the last of interest rate hikes.  The "needy" market wanted to hear the DONE wword out of

[Experienced]

Thanks for correcting my typo....much appreciated If it was just up to Powell alone, I would agree with you but with "the gang that can't shoot straight" running the White House, there is a risk that things could get worse than you and Elon suspect.  When you add the Republicans into the equation and a divided Congress in the US, the risk that things get screwed up is

[Obscure1]

There is always a risk that things can go off the rails.  Holding cash is never a bad idea but there are times like now that cash is more appropriate when there are so many plates spinning

[Experienced]

Where is this guy when he could be a valuable asset in the White House....rofl

[Oldnagger]

It certainly doesn't help if the spinner himself has dexterity issues !!