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General Investing and Economics Discussion - No Politics
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<blockquote data-quote="Deleted member 2897" data-source="post: 806306"><p>Fed's latest statements and forecasting came out today.</p><p></p><p>The net-net should be a positive for the stock market, unless it is weary the Fed is totally ignoring its charter to the point it will crash the economy. I don't think the market has gotten to that sentiment yet. But the expectations and commentary to me were interesting.</p><p></p><p>Of note, it is forecasting 7% GDP growth this year. That may prove to be the single highest growth rate in the last 50-60 years (1984 was 7.2% coming out of stagflation). Also of note, the highest GDP growth in the last 35 years was 4.7% at the height of the dot-com explosion in 1999. So they're forecasting 50% higher growth than the previous record in recent history.</p><p></p><p>Inflation is currently running at 5%, 2.5x its target.</p><p></p><p>Its unemployment forecast for the end of the year is 4.5%, which is below what is considered full employment.</p><p></p><p>And yet, despite all of these factors,</p><p>* No increase in interest rates from 0%.</p><p>* More printing of money from the treasury. M1 money supply is up $15 Trillion in just the last year, from $4 Trillion to $19 Trillion. (!)</p><p>* Commitment to $1.5 Trillion a year of quantitative easing - buying mortgages and other debt out of the market, to keep interest rates artificially low. The Fed currently sits on $8 Trillion of these sorts of assets it has purchased over time.</p><p></p><p>All these bulletpoints are why I think it should be net positive for the stock market - because we're going to continue to pour gas on an inferno.</p></blockquote><p></p>
[QUOTE="Deleted member 2897, post: 806306"] Fed's latest statements and forecasting came out today. The net-net should be a positive for the stock market, unless it is weary the Fed is totally ignoring its charter to the point it will crash the economy. I don't think the market has gotten to that sentiment yet. But the expectations and commentary to me were interesting. Of note, it is forecasting 7% GDP growth this year. That may prove to be the single highest growth rate in the last 50-60 years (1984 was 7.2% coming out of stagflation). Also of note, the highest GDP growth in the last 35 years was 4.7% at the height of the dot-com explosion in 1999. So they're forecasting 50% higher growth than the previous record in recent history. Inflation is currently running at 5%, 2.5x its target. Its unemployment forecast for the end of the year is 4.5%, which is below what is considered full employment. And yet, despite all of these factors, * No increase in interest rates from 0%. * More printing of money from the treasury. M1 money supply is up $15 Trillion in just the last year, from $4 Trillion to $19 Trillion. (!) * Commitment to $1.5 Trillion a year of quantitative easing - buying mortgages and other debt out of the market, to keep interest rates artificially low. The Fed currently sits on $8 Trillion of these sorts of assets it has purchased over time. All these bulletpoints are why I think it should be net positive for the stock market - because we're going to continue to pour gas on an inferno. [/QUOTE]
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