Has the Fed just shot the US economy in the face ? Or will it be a soft landing?

The Fed can't model r*, the real rate of interest. It has no idea what further treatment is required for the US economy- more or less or no further tightening.

Or maybe there is another dimension we don't know about. And if it gets it wrong it will either tip the economy into a recession or open the door to higher inflation. If the Fed were a chef it wouldn't know when to turn off the rice. The only metric it would be using would be the fridge. This is late monetarism , baby.

In this context, the technical charts can't tell us anything. Rates will go up or down but it's being driven by something that is not regulated and not modelled.

14 narratives that drove the market Jan -May 2023

1.?????? US hard landing and recession

2.????? US soft landing

3.????? US no landing, acceleration

4.????? China reopening and consumption boom

5.????? China slowdown and disinflationary balance sheet recession

6.????? Inflationary boom in Germany and Europe

7.????? Recession in Germany and peak inflation

8.???? Regional bank crisis in the US may signal end of US hegemony

9.????? Fed’s gonna cut in July

10.? Fed’s gonna hike in July

11.?? OPEC production cuts will take oil back up through the highs

12.? OPEC doesn’t matter, they have lost control of the market

13.? US debt crisis

14.? AI will save or kill us all

This is slapstick. So the markets don't know either. And there is no common narrative. Even the commentators are polarised. It's Schr?dinger's stock market.

https://www.cnbc.com/video/2023/09/01/econ-data-is-now-very-consistent-with-a-soft-landing-says-goldmans-hatzius.html

https://www.cnbc.com/video/2023/08/24/charles-schwabs-liz-ann-sonders-maybe-the-economy-isnt-as-robust-as-we-once-thought.html

https://www.cnbc.com/video/2023/09/01/were-seeing-the-soft-landing-that-the-markets-been-looking-for-says-ed-yardeni.html

https://www.cnbc.com/video/2023/08/23/credit-spreads-are-narrowing-as-the-10-year-yield-rises-says-canaccord-genuitys-tony-dwyer.html

https://www.cnbc.com/video/2023/08/30/rfk-jr-the-american-economy-is-in-trouble.html

https://www.cnbc.com/video/2023/08/31/the-rally-will-broaden-as-market-enthusiasm-for-a-soft-landing-grows-invescos-brian-levitt.html

So how will you know who is right? You need a better model than half of them have .