FED HIKES BY 50BPS, COMMITS TO MASSIVE BALANCE SHEET REDUCTION

Markets are rallying on the news the Fed hiked by 50bps and will draw down on its balance sheet by $47.5b per mo — likely because people feared a 75bps hike. Either way, the Dow is now jimmied higher 214 and the NASDAQ by 42.

The big moves are enjoyed in the oil sector, with WTI higher by more than 5.4%.

UNDERSTAND SOMETHING: Unlike previous Fed cycles, the Fed isn’t hiking because the economy is hot. Quite the contrary. The Fed is hiking because the economy is FUCKED. This is quite a different thing and buying now implies the Fed will be successful in keeping inflation at bay. This is fallacy. We have supply disruptions that cannot be offset by a tick downward in GDP. Ergo, and this goes without saying, I am bearish.

I am, however, sanguine on commodities here.