The Federal Reserve finds itself in a bind, hesitant to acknowledge potential rate cuts in March due to concerns about the draining of reverse repo and the looming reserve constraint for small banks. The housing market, a reliable barometer of economic trends, is signaling a foreboding outlook for unemployment in 2024. Current market indicators, from falling stocks to a rising $VIX, paint a confusing picture, leaving analysts puzzled as conventional patterns seem disrupted.
Fed doesn't want to concede March rate cuts, but it knows reverse repo will be drained by then and small banks will hit reserve constraint immediately
trapped again
— zerohedge (@zerohedge) January 17, 2024
The housing market is a reliable predictor of unemployment
Anticipating the unemployment rate with a 18 month lag
Currently, it predicts a rapidly rising unemployment rate in 2024 pic.twitter.com/XX0aIcHnId
— Bravos Research (@bravosresearch) January 17, 2024
Current situation:
1. Stocks are falling like the bull market is over
2. Gold is falling like the Fed is no longer pivoting
3. Oil prices are falling like we're heading into a recession
4. Bonds are falling like we're heading for a soft landing
5. $VIX is rising like markets…
— The Kobeissi Letter (@KobeissiLetter) January 17, 2024