Powell Promises Patience: So What? It Doesn't Matter

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That's what the dot plot of expected rate hikes looked like in December. It will not look that way following the next FOMC meeting.

Over time, the dot plot always thickens.

The December meeting will show unanimous or near-unanimous opinion that the Fed is doing a brilliant job for the current year.

What Does Matter

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Suddenly, There's No Appetite for Bond Deals as Spreads Widen. And the BIS Fears "Bulge of BBB Debt" and "Financial Cycle" Default Waves.

The BIS warns of $3.15 trillion in BBB corporate debt hovering just above junk that "if and when the economy weakened, it is bound to put substantial pressure on a market that is already quite illiquid and, in the process, to generate broader waves."

Economy Isn't a Truck

No matter how hard the Fed tries, the economy can't be steered like a truck by a group of economic wizards. The economy isn't a truck.

Attempts to steer the economy coupled with inane fear of routine price deflation are a key reason we have these bubbles.

CPI Deflation Not a Problem

The BIS did a historical study and found routine deflation was not any problem at all.

"Deflation may actually boost output. Lower prices increase real incomes and wealth. And they may also make export goods more competitive,” stated the study.

For further discussion of the BIS study, please see Historical Perspective on CPI Deflations: How Damaging are They?

Tinder Stacked a Mile High

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Real World

In the real world, bubbles eventually matter.

My assessment stands: A Fed-Sponsored Economic Bust is Coming no matter what the Fed says or does now.