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Or you can now use TapaTalk again!rangerray's Account Talk
- Thread starter rangerray
- Start date
rangerray
Well-known member
OK. Here’s what I gleaned from Trump’s statements on interest rates. This is not a political post, so please keep that focus in mind.
He says, interest rates SHOULD come down. I may be wrong, but I don’t think he can actually lower interest rates?
At a later point, interest rates do come down, but that was going to happen anyway, regardless of Trumps statements.
Therefore, it appears that Trump influenced interest rates.
My point is, Trump probably already knew interest rates WOULD come down. So, he gains some political cred having demanded it. If you can filter out the politics —and everybody has their own ideology, as it should be— then, you may see a market timing event on the horizon.
This comes to mind to me this morning because news sources are attributing the action today to Trumps comments. Rate cuts are coming, but you knew that already.
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weatherweenie
Well-known member
Part of the inflationary issues we have are thanks to unreasonably low interest rates for too long. Be careful what you wish for, you might get it.
rangerray
Well-known member
I’m not really wishing for it. I’m just concerned about how I’ll respond. I don’t think stocks will do as well if rates don’t continue on a path that coincides with inflation going down, but that’s just my best guess.
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FireWeatherMet
Well-known member
The Fed was always structured independently of the Executive Branch, other than being nominated by the President. And there's good reason for that. A President will likely always want rates to be as low as possible, while the Fed needs to manage the entire monetary system, and make sure we never get a prolonged runaway inflation event like happened for 10+ years, from the early 70's to the early-mid 80's. So regardless of Dem or GOP, this country's financial health is in danger, whenever a politician demands the Fed do something that would not be prudent economically. Rates were high in the late 70s thru early 80's in order to choke out inflation, and when the Fed was pressured politically to lower them, the decreasing CPI reversed and inflation went back up. And in a tribute to the late Jimmy Carter, the new Fed chair Paul Volcker explained to him during the 1980 campaign that rates would have to rise to stop the spiraling inflation and Carter agreed, even though he knew that would hurt his re-election chances. Reagan also supported Volckers higher rates, even though it led to a severe Recession in 1982. The end result was inflation decreased sharply from 1983 onwards, like it did here in the US the past 2 years, falling from near 10% down to a much more manageable 3-4%.
So bottom line, Trump (or Biden if he were doing the same), needs to consult the fed privately but leave them alone when it comes to policy.
But Ray, I think you're onto something when you speculated that maybe Trump is doing all this for show, since grocery prices are still high, to blame someone else for it. But the honest answer is that this interest rate cycle has to just run its course. It took 10-12 years in the 70's-early 80's, we've only been in this cycle for 3 years and its already significantly improved.
rangerray
Well-known member
Yes! Glad you caught my point!
Regardless of what I’m seeing on TV and reading here, I sense that the country is ready to see what we can do with a pandemic and supply and demand issues behind us. New investment is coming in. I’ve read that Samsung may move some manufacturing here. Of course, I’m near the outskirts of a really booming area of Mississippi and I’m seeing a housing and retail explosion!
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Been there.
rangerray
Well-known member
Investor confidence will rise according to some guy I heard today on Fox Business:
>Trade deals are ahead
>Possible Fed Reserve rate cuts after June meeting
>Tax cuts extended in July
All of this could point to a strong second half of the year. There is evidence that the market will receive these trade deals positively; we’ve seen it already. Oil is going down, which will be perceived by the public as Trump “doing something” and illegal border traffic has all but stopped compared to a year ago, so there’s that.
It’s not that big of a jump to think that people might begin to think this is a good time to invest.
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Boghie
Well-known member
@rangerray, even products directly imported from another country will not be as affected by tariffs as folks think.
I have a medical consumable that pretty much comes from France. I received an email from the Frogs that whined about having to raise prices as a result of the tariffs - it was actually legit, but using the word 'whine' in relation to France puts a smile on my face
.
Anyway, the price went up $15 to $294 (from $279).
The implication is that the VAST majority of the price is consumed by profit and expense inside the United States - which is not tariffed. The other implication is that this reseller must not be very efficient. Basic math tells me that the product import price is $100. That means that $194 is overhead - I think I will poke around for another reseller.
By way of comparison, the 'Era of Inflation' resulted in a rise from $173 to $260. That rise was rapid (about a year of increases) and it will never reduce unless there is deflation. Tariffs raised the price by 5%, inflation and regulation (and possibly a company taking advantage of a news cycle whining about it) raised the price by 50%.
The final thought: This tariff fear is something to invest into. It is rather dumb.Similar threads
