The Fed lays down the LAW

Is there a difference between a recession and a “noticeable slowdown?”

We are about to find out.

The Federal Reserve hiked interest rates by a quarter of a point, bringing the benchmark borrowing rate to 5.25%-5.5%.

That means interest rates are at the highest level in 22 years.

There will be a lot of excitable commentary about all this… but the truth is that this was precisely what was expected.

If anything, it’s a good sign because Federal Reserve Chair Jerome Powell doesn’t seem too worked up either about inflation or about the possibility of a recession.

However, if I had to worry about one or the other… I’d worry about recession.

Here’s why. Consider the Chair’s comments…

“If you go through a period where inflation expectations are not anchored and inflation is volatile, it interferes with people’s lives and with economic activity,” he said. “That’s the thing we really need to avoid, and will avoid.”

Emphasis mine… but I think it’s warranted. The fact is that Powell has established his reputation as an inflation hawk and put the credibility of the Fed on the line in the inflation fight.

If there’s a recession… well, that’s what most people were expecting. If there’s an inflation comeback, that’s the entire legitimacy of the central bank.

Consider this too, which sounds almost like a high school football coach telling a kid who is hurt on the field to suck it up.

“The worst outcome for everyone, of course, would be not to deal with inflation now and not get it done,” he said. “Whatever the short term social costs of getting inflation under control, the longer term social costs of failing to do so are greater and the historical record is very, very clear on that.”

That’s practically insane in its clarity. Yeah, there are costs to what we are doing, but the alternative is worse. So suck it up, there will be no relief this year.

Powell practically ruled it out. “I’m saying we would be comfortable cutting rates when we’re comfortable cutting rates, and that won’t be this year, I don’t think it would be,” he said.

Look, say what you will about the Fed… but the signals are clear. There’s no mystery here.

Fighting inflation > economic growth.

Right now, the economy is holding up and earnings look good.

But I’d worry more about the economic engine sputtering than inflation spiking.

It’s clear Powell will crash this plane before letting that happen again.

Corey Snyder

Publisher, Rogue

WORD ON THE STREET

Hunter Biden Plea Deal COLLAPSES At Last Minute

The Guac Goes Bad – Chipotle Mexican Grill (CMG) disappointed investors after it reported less revenue than expected. Despite actually outperforming expectations when it came to earnings, shares were down more than 8.6% in extended trading.

And Now, It’s A Scandal – Members of the audience audibly gasped after U.S. District Judge Maryellen Noreika rejected a plea deal that would have given President Joe Biden’s son Hunter relatively lenient punishment in regard to federal tax charges. Hunter Biden pled “not guilty” in response to the charges, though it is expected the two sides will try to hammer out a new plea bargain agreement

Judge Noreika, a Trump appointee, said she would not “rubber stamp” the deal

It’s A Barbie World – Mattel CEO Ynon Kreiz said that the Barbie smash hit is all part of the plan. “The goal was to create, to build a film franchise and continue to expand the brand in more ways,” he said. Now, when we say MCU, we’ll need to clarify whether we are talking about the Marvel or Mattel Cinematic Universe.

FTC Plans Lawsuit Against Amazon – The Federal Trade Commission, under the leadership of FTC Chair Lina Khan, is planning an anti-trust lawsuit against Amazon that could break up the company. The case is reportedly to primarily focus on Amazon Prime, which the FTC will contend prevents other websites from lowering prices. Khan argued that Amazon’s business practices were problematic in a 2017 academic paper that helped establish her reputation.

HOT SPOTS: What’s Going on in Geopolitics

Ukraine Counteroffensive Underway (For Real This Time) – Ukraine says its forces are “gradually advancing” near Mariupol and Berdyansk as they attempt to cut the land corridor to Crimea. After limited gains, Western military officials say the Ukrainian counteroffensive is now underway on a large scale.
China Removes Foreign Minister – A shakeup at the highest levels of the Chinese government has observers asking what’s really happening in Beijing. Qin Gang, the outspoken and aggressive Foreign Minister, has been replaced by Wang Yi. However, it’s unclear whether this means China is backing down from support for Russia and confrontation with the United States.
Japanese Population Declines At Record Level – The Japanese population has declined in every prefecture, a drop of about 800,000 people in total. The total population is about 125.41 million. The number of foreign residents is also up by more than 10%.

CUTTING EDGE: What‘s Happening In Tech

Stability AI Releases “Most Advanced” Model – Stable Diffusion XL 1.0 has now been released, promising more vibrant colors and better contrast in a leap forward for text-to-image models. Stable Diffusion XL 1.0 is also supposedly better at producing legible text – a major concern for anyone who has used previous versions.

The Doctor Is In – Amazon Web Services has created a new service called AWS HealthScribe that will use AI to generate transcripts and summaries of patient visits. The goal is to save doctors time, what health care professionals supposedly call “pajama time.” It generally costs doctors about one to two hours outside of office hours a day.

California Investigating Tesla For Autopilot – I keep telling you, they are going to throw everything they have at Elon. The California attorney general is investigating Tesla regarding its Autopilot feature. The investigation may have been started by alleged “phantom breaking” that occurred when using the autopilot feature – sudden breaking caused for no apparent reason.

“Don’t count out Mark Zuckerberg.”

Meta Platforms looked like it was on death’s door not long ago. Under fire from the press and Congress, the brand bleeding out, and laying off workers by the thousands… but META has bounced back.

And so has Zuck.

MARK ZUCKERBERG BOUNCES BACK

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The Fed lays down the LAW

WORD ON THE STREET

Hunter Biden Plea Deal COLLAPSES At Last Minute

HOT SPOTS: What’s Going on in Geopolitics

Japanese Population Declines At Record Level – The Japanese population has declined in every prefecture, a drop of about 800,000 people in total. The total population is about 125.41 million. The number of foreign residents is also up by more than 10%.

CUTTING EDGE: What‘s Happening In Tech

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