Come On, Man!!!

Come On, Man!

Enough already.  It is April and I wake up to snow.  They said a trace last night, but now 6" near the coast and 2"-4" elsewhere.  Really?

I picked up an interesting book this weekend, "Predicting The Markets" - by Edward Yardeni.  Still pretty early in the book, but I like the macro analysis so far.  Right now a bit of a history lesson.  You forget how volatile and high Fed rates got around 1980.

The book talks about The Saturday Night Massacre in 1979, where Volcker announced on a Saturday radical new approaches to dealing with inflation. When he made announcement, Fed funds rates were 11.6% (October 1979).  They then went as high as 19.96% in early 1980!! Can you imagine that?  And volatility was all over the place as it ended 1980 below 10%. whew!  No wonder we had a recession early in Reagan presidency.

The ten year bond went to 15.8%.

We're worried about a 75 basis point move in a year and they had 800 basis point move in under 9 months?  But it also shows that if the inflation genie gets out of the bottle, the Fed may have to step in and take drastic action... even if it causes a recession.