I’m not overly concerned about Delta wrecking the economy or inflation getting out of control. I could be wrong, but that’s where I am and have been mentally all summer. You know this.
But I also agree with what Peter Boockvar is saying here. We’re still running at a trillion-dollar-plus annual rate of continued asset purchasing and it’s hard to see what exactly that is doing to help anyone at this stage in the game…
We’ve had 3 days in a row of 1mm+ doses administered in the US Thursday thru Saturday and just shy of that yesterday. The Rt rates are falling in almost every single state according to https://covidestim.org/. I read a survey that said 30% of those unvaccinated will get the shots after the FDA approves them which at least for Pfizer could happen in days. And I was at a concert Friday night at Citi Field (proof of vaccination and/or negative test required) with 10’s of thousands of people. While again I don’t think Powell will commit on Friday because there is no need a month before the next meeting, I do think that a month from now Delta should not be the excuse from the Fed not to begin cutting its asset purchases. They should absolutely start this process. If someone is altering their behavior because they are afraid of Delta, QE won’t solve that. If someone wants to buy a home, QE has made that much more expensive. QE is not going to reopen auto factories that can’t get enough semi’s but QE can certainly stoke more demand that creates even more inflation and traps more people into more debt. The cost/benefit analysis still badly leans towards the ‘cost’ with the current pace of QE overload that is still totaling $1.44 Trillion annualized.
I’m not a Fed basher and I’m not even really qualified to have an opinion about this stuff. But I have two eyes, two ears, market experience and a lot of common sense. Is that good enough? If so, announce the taper in September, begin it in December. Let the stock market cry for a few weeks, we can take it. We’re plus 18% on the year, that’s a ton of cushion. There are plenty of buyers for anything risk-free with a yield attached to it.
Just my two cents, as a suburban rap fan and bagel connoisseur.