Another hole in the Feds case for a rate cut

[tsptalk]

A booming manufacturing report just poked another hole in the Fed’s case for a rate cut

The Philadelphia Fed manufacturing index registered a reading of 21.8 in July, a major jump from 0.3 in June and head of Wall Street estimates for 5.

That marked the highest reading in a year and runs contrary to pessimism over the sector.

Federal Reserve policymakers are expected to approve at least a quarter-point interest rate cut this month, despite signs that economic growth has firmed.

https://www.cnbc.com/2019/07/18/phi...her-hole-in-the-feds-case-for-a-rate-cut.html

 

[TommyIV]

Could be the Fed is primarily troubled by the bond market and the inverted yield curve. Instead of waiting for growth data to get bad, rate cuts now are an attempt to prevent what some think to be an inevitable recession. Some hedge fund managers are betting on more rate cuts to come and hedge fund manager Kyle Bass expects rates to return to zero.

https://www.ft.com/content/fa8cfc36-a7d0-11e9-984c-fac8325aaa04

 

[tsptalk]

hedge fund manager Kyle Bass expects rates to return to zero.

That would be very disappointing. You'd think he's expecting another financial crisis.

 

[jtt013]

That would be very disappointing. You'd think he's expecting another financial crisis.

Maybe I'm in the minority, but I'd like at least another rate hike this year to give us more leverage for the next crisis...

Sent from my SM-N960U using Tapatalk

 

[tsptalk]

Agree. Plus, when not in stocks, or for those who may be retired, it would be nice to get more than 2% a year in the G-fund, for a change.

 

[TommyIV]

That would be very disappointing. You'd think he's expecting another financial crisis.

That seems to be the case. But to his defense he was one to successfully bet against the housing market in 2008.

But I agree that unless the Fed sees obvious trouble ahead that the rest of us don't, a rate cut just sends a message to the world that the Fed doesn't have faith in the state of U.S. economy down the road and so they shouldn't either.

Here's another link about the same subject if the last link sent you to a subscription page: https://www.cnbc.com/2019/07/17/hed...ss-bets-the-fed-will-have-to-cut-to-zero.html

 

[nasa1974]

We went and saw our financial advisory last night and he said that the rate reduction will be good for the market, however he did say the market was inflated. He feels we could see a 20-25% reduction in the near future.

 

[James48843]

We went and saw our financial advisory last night and he said that the rate reduction will be good for the market, however he did say the market was inflated. He feels we could see a 20-25% reduction in the near future.

I agree- this particular expansion has been longer and higher than I expected, and longer and higher than is the norm for the other data points we are seeing. That tells me it's artificially pumped up right now and I think at least a 10% pullback is likely sometime soon. Whether or not that then converts into a full fledged recession is still up in the air, but I think it is possible.

Crossing my fingers for a soft landing.

 

[nnuut]