Bill Dudley Says Fed Might Need to Force Stocks to Fall

Former Federal Reserve Bank of New York President Bill Dudley says the Fed "hasn't really accomplished much yet" with its efforts to control inflation, and will need to tighten financial conditions to push bond yields higher and stock prices lower. "If financial conditions don't cooperate with the Fed, the Fed's going to have to do more until financial markets do cooperate," Dudley, a Bloomberg Opinion columnist. said on Bloomberg Television. Dudley's opinions are his own.

[JC-XL]

The FED will NOT "force" Stock Market crash - the FED will just remove some of the ARTIFICIAL life-supporting measures it has maintained since 2008 and the market will crash ON ITS OWN!

[pradbourne]

now that fed members have sold their stocks it is the right time to drop the market.

[netstarr]

Lol This fedster was on the federal reserve board when they started the money printing.

[mack-uvgn]

Since he’s no longer a central bank member he can be honest.

[mh]

"Don't fight the Fed works both ways "

[raymak]

The recent increases in rent are obscene far outpacing wage increases. They are not talking about this, they want to blame inflation on wages, .The FED and government mistakes they are covering up.

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[topking]

I'm going to post this on every page 2024 will be a whole new world financial system

[buytheartist]

Mr. Dudley is spot on. Love all the armchair economists criticizing him in the comments. Stay dumb (money).

[robertlunn]

Why didn’t they reduce balance sheet first?

[Buppasiri]

If this guy was serious about inflation US wouldnt have zero bound rates when inflation is over 10%. The fed is done. It's all over but the stock market is like a decapitated hen. It takes a while before the body realize the head is gone.

[mikek.]

Economic expansion??? What??? These "experts" are so out of touch with main street!! What planet they live on??

[dsamh]

Bloomberg out there doing the ground work on Claus's GR.

[jamestheory]

Buy the dip crowd will learn a painful lesson.

[randoroo]

"...it was much harder to get rid of the inflation vs. the inflation we have now." Are you sure about this Mr. Dudley? Seems like you're making some assumptions about the nature of this inflation.

[talldog]

He thinks that if the Fed causes unemployment to go up, then that will necessarily cause inflation to go down. What happens when unemployment goes up and inflation gets even crazier?? What will the Fed do then?

[brian]

The FED is going to crash the market.... again.. what a shocker

[sophiamiller]

I hear people ask if this is the right time to invest, yes because the stock market have always and will always be a volatile market, that is why it is important to have proper research, analysis and strategy when investing

[MrFdfa]

I think the Fed should begin rapid balance sheet reduction first, before raising any Fed interest rates.
The current inflation is due to the Ukraine war, Covid-19 disruption, and deglobalization, which cannot be solved via interest rates.
Raising the interest rates will only let ordinary people suffer more, especially with the increase in the mortgage/rent payment.

For ordinary people, the effect of double the mortgage/rent payment is much higher than double the energy & food bill. People can go through the unavoidable increase in their energy & food bills, but why should the Fed add a much heavier layer of higher mortgage/rent to them quickly before they can go through the higher bills first?

The rapid expansion Fed balance sheet via the QE program is unhealthy, and it mainly helps the people in the financial world, while the interest rate affects the living cost of every ordinary people.
I think the Fed should start the rapid balance sheet reduction first, while raising the interest rates only after the reduction is finished, and give some time to the ordinary people to let them have enough income to pay for their monthly bills.


Recently, lots of private bankers urge a quicker increase of the Fed rates, which will only benefit themselves but not the general public, as the bankers have already purchased lots of derivatives against the well-informed rates rise. The quicker raising rates make the financial cost and holding time value premium of the hedging derivatives lower, and the higher rates let the bankers earn much higher interest payments after these hedgings.

Originally, the bankers should not earn so much profit from these hedgings. But if the rates are raised much higher and quicker, the bankers can get big profits from the lower cost derivatives, and also enjoy higher interest payments from their fixed-income securities holdings after this profit, while they also earn the money from the loss which Fed made during the selling of their holdings with a lower price after its rates rise.

Rates up first -> bonds price down -> later Fed reduce balance sheet with a lower price -> public Fed lost money to private bankers -> BAD.
Reduce balance sheet first with a normal price before rates up -> public Fed does not lose -> raise the rates after balance sheet reduction -> GOOD.

After transferring so much wealth from the public into the private bankers via a quick hudge rates rise, If the balance sheet is still not reduced, a recession will come as every ordinary are suffering from the rapid huge rates disruption, and Fed will just see the increase and later reduce the rates, as well as, create an even bigger unhealthy balance sheet!