AndreasStenoLarsen

AndreasStenoLarsen

09-11-2022

09:11

For the first time in decades, there is a political tailwind for central banks to provide the overleveraged crowd a middle finger πŸ–• A thread 1/n

The Fed has been crystal clear that the Fed put is no longer linked to asset markets but rather to observed inflation, which tends to lag asset markets 2/n

The inflation fight is more important to the Biden administration than the S&P 500, which is a sharp contrast to the former administration The Fed has a green light to take down demand - also as it rhymes with climate/energy targets 3/n

Remember how for example Lael Brainard did a 180 to secure the VP role at the Fed in November 21 From a true Dove to a true Hawk in a matter of weeks as the Biden administation wanted it 4/n

I underestimated the severity of this shift of policy focus within the White House, but it seems safe to say that the Fed is now willing to kill demand and asset markets to ensure that inflation drops 5/n

Even the good old ΓΌber-Dove in town in Sweden is now saying the same. See this quote from the Swedish Riksbank today Forget about a helping hand, if you took up too much debt in 2020/2021.. 6/n

Central banks are certainly signing to a new political tune and for the first time in decades they have the true political backing to take down excessive risk taking (at least temporarily) Bottom-line: Stop trading monkey jpgs 7/n

On a more serious note. This clearly increases the risk of a more pronounced bear market and also the risk of central banks overdoing things in the opposite direction of 2020/2021 Buckle up and position accordingly 8/n



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