Two big shots issue a warning, the Federal Reserve is in a dilemma!

Billionaire investor Stanley Druckenmiller is concerned that the Federal Reserve has put itself in a dilemma regarding possible future rate cuts. Druckenmiller, commenting on the strong September job growth in the US that exceeded all economists' expectations, said via email, "I hope the Fed won't be trapped by forward guidance like in 2021," "GDP is above trend, corporate profits are strong, the stock market hits record highs, credit is very tight, and gold hits new highs. Where is the restriction?" The 71-year-old Druckenmiller, who manages the Duquesne Family Office, echoed warnings from other Wall Street figures that the market needs to adjust its expectations for the speed and extent of Fed easing. Traders scaled back bets on a significant rate cut next month after the jobs report was released, ruling out a 50-basis-point reduction matching the Fed's action in September. Meanwhile, signals from Fed policymakers last month indicated a leaning towards cutting rates by 50 basis points at the remaining two meetings this year. At the Grant's annual fall conference in New York earlier this week, Druckenmiller questioned the Fed's decision to cut rates by 50 basis points at the last meeting. BlackRock CEO Fink also said earlier this week that the market is too optimistic about Fed easing, citing strong US economic growth as the basis. Top economist Mohamed El-Erian also issued a warning to the Fed after the jobs data was released, saying "inflation has not disappeared." El-Erian, director of Queen's College, Cambridge University, said that after the unexpectedly strong job report in September reminded people that "inflation has not disappeared," the Fed needs to refocus its efforts on combating rising prices. After the release of figures on Friday far exceeding expectations, causing a surge in the US stock market and bond yields, El-Erian made comments. Nonfarm payrolls increased by 254,000 in September, the largest gain in six months. El-Erian said in an interview on Friday, "This is not just a resilient labor market. If you look at these numbers on the surface, this is a strong labor market." He added, "For the Fed, this means working harder to resist market demands to consider a single mandate and not talk about 'the Fed should only care about full employment.'" The Fed's dual mandate is full employment and price stability. El-Erian said, "For the market, this overturns excessive expectations of aggressive Fed rate cuts, bringing the market closer to what might actually happen."