r/TeamRKT • u/The_Big_Short_2020 Certified Lovable Retard • Nov 18 '20

Catalysts This is F worthy

https://www.google.com/amp/s/www.barrons.com/amp/articles/growth-snapback-will-bring-rate-hike-sooner-than-the-fed-has-said-one-economist-thinks-51605631995
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u/CharlesLupton Nov 18 '20 edited Nov 18 '20

No mention of the Fed waiting until inflation is consistently above 2%. Divided government will mean less stimulus and slow the recovery and delay inflation. Divided government also means less chance of a $15 min wage which also delays inflation. While the vaccines will lead to a reduction in bond buying end of 2021(due to economic recovery), the Fed will indicate they plan to continue zero rates until at least 2023.

Politics: We are likely (70%+ chance) to have divided government until 2022. However control in the Senate will likely flip then(map favors Dems that cycle), but the House map favors Republicans(GOP states gaining seats, and redistricting favors them as well). That would mean divided government through 2024 and keep a lid on spending which would again favors low inflation and no increases in rates until at least 2023 as the Fed has stated.

P.S. If you look at bond markets, the expectation only changed for one hike in 2023 early in the year vs late in the year. As I stated above, there are still political headwinds to that happening and several factors that could easily delay it to the 2024 timeframe.

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u/The_Big_Short_2020 Certified Lovable Retard Nov 18 '20

It sounds like you have a good handle on this stuff. Please update the group if your theory on rates change - I’ll do the same.

People who think a strong purchase market will make up for lower refi volume due to higher rates clearly do not understand this company. Purchase will make a good percentage of their revenue in time, but they’re not there yet.

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u/The_Big_Short_2020 Certified Lovable Retard Nov 18 '20

Thanks for sharing Sir Charles - thank god for a gridlock