OT: Fed rate cut
- Thread starter EngDawg
- Start date
It is extremely hard to justify. In my opinion, the process of lowering rates is a great pressure release valve if things are running hot for a long time, but take a turn for the worst like 2009. The Fed responded by lowering the rates to keep money flowing into the system. Right now, in my opinion, lowering the rates is like dumping too much fuel on the fire. It is going to make the economy jump maybe 3%, but then when things take a turn and we hit a recession, the fed will not have any mechanism to help.
2009 would have been way worse if the fed didn't have the freeboard area to move the interest rate down. As long as the economy is growing, the rate should inch up, over months and years. When the economy hits a long dead spot, lower the rate a little. That is the ability the fed has over the system. Too bad we are burning that move on a good economy.
I am going to hope the lower the interest rates. I am going to stay in aggressive for 3-4% growth and then switch everything to cash for about a year. Let it hit rock bottom, just in time for dems to take over and ride the long wave to 30% return. Just like 2009. Love the party change over. If you play it right, damn its nice.
2009 would have been way worse if the fed didn't have the freeboard area to move the interest rate down. As long as the economy is growing, the rate should inch up, over months and years. When the economy hits a long dead spot, lower the rate a little. That is the ability the fed has over the system. Too bad we are burning that move on a good economy.
I am going to hope the lower the interest rates. I am going to stay in aggressive for 3-4% growth and then switch everything to cash for about a year. Let it hit rock bottom, just in time for dems to take over and ride the long wave to 30% return. Just like 2009. Love the party change over. If you play it right, damn its nice.
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As long as we are willing to hand bailouts to farmers that hate socialism, we can and always will win trade wars. Good for them getting huge subsidies for investing their time and money in really ****** crops that they cannot sell due to tariffs. They should have known better.
First, you do not lower rates to prevent a slowdown. You actively lead the country to avoid a slowdown. You lower rates to end a slowdown. Once you lower them, the fed has no other mechanism. That is the best bullet if you will. Using it so we will not feel the pain of our own doing....... maybe we should look to a new tactic internationally.
Yeah. Everyone says they're going to get rich by timing the market. But it's impossible to do on anything approaching a consistent basis. There's a reason index funds are usually 4* rated by Morningstar. It's because even with the best professional investors in the world, more of them can't time the market than can.
Which he shouldn’t be doing.
I saw the Times article where Trump was graded by 20 or 30 Economist. Most gave him A- to C- across 10 or so categories, but he got F’s across the board on “is he letting the FED operate independently”.
I saw the Times article where Trump was graded by 20 or 30 Economist. Most gave him A- to C- across 10 or so categories, but he got F’s across the board on “is he letting the FED operate independently”.
Not surprising, I've never seen a President challenge the Fed like Trump has
done and history will tell the tale on whether he was right or not. He seems to challenge just about everything which is making a lot of heads explode
but which I have to admit is entertaining. Ultimately the people will decide his fate via the Electoral College in 2020 which is the way the founders set things up.
Que the Russians**
done and history will tell the tale on whether he was right or not. He seems to challenge just about everything which is making a lot of heads explode
but which I have to admit is entertaining. Ultimately the people will decide his fate via the Electoral College in 2020 which is the way the founders set things up.
Que the Russians**
There's no question what the Fed did in the 4th Qtr of 2018 was damaging. I think Trump was right to light Powell up. Thankfully, we have recovered but Trump is still on Powell's arse. I hope we get at least a quarter point off tomorrow or the market will tank in the short run. Powell won't last the week if we don't see a cut. I like the idea of keeping the interest rate inflated to give us some wiggle room if the economy needs a boost. I also like high savings rate for online accounts. Contradictory? Probably so, but I hate automated selling (and buying) in the market (at my age).
Deleted because despite quoting what you wrote, I still managed to misread it. My bad.
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Mathematics is going to bring the US economy to its knees. Just like a drunk bender finally ends, so will end the US drunken binge on ever increasing leverage and the decimation of the middle class. Fill the root cellar because this one is gonna be a *****. The 1% are doing so as we post: https://www.newyorker.com/magazine/2017/01/30/doomsday-prep-for-the-super-rich
Guys I was kidding. No way to predict the market, but it has been running hot for about 8 years now. I got raped in 2009, as it was my first time going through it. As of this December I am scaling back though.
It is so much a forgone conclusion that the rates will go down, the market is probably barely move up if at any, if they lower it due to the people trying to game the system. May even move down due to crazy people trying to game the system. The system already adjusted a month ago due to this cut in the rate. The real issue would be the short term loss if they do not lower it a 1/4.
Yeah he is running the fed like a business man that all he does is over leverage himself until he declares bankruptcy. There is zero need to lower the interest rates right now. Zero. Why add fuel to an economy that is already burning hot. Just let it burn slow and steady.
Yeah. I've got about 20% in a very conservative investment right now myself and only about 50% in the US stock market total. I agree a downturn is coming and I'm at a point right now I'd rather not take the full brunt of it and am willing to give up some return for the reduced risk.
Yep. You can get richer by waiting on the market to undervalue individual companies you wish to buy, but moving in and out between cash and index funds based on guesswork is a losing proposition. In either case, its a hell of a lot more work than just buying a Vanguard index fund and dollar cost averaging.
The other reason why nobody can beat the market is that all these index fund and other mutual fund managers ARE the market. 85% of the market is institutional money, so it creates a cycle. People buy into their fund, the market goes up. People withdraw, the market goes down. And they can’t easily liquidate or add to their huge positions in companies with any sort of agility without greatly affecting the price of the stock, so they are very much at the mercy of the money coming in.
It's easy to justify by the Fed's own mandate
The Fed raised the Federal Funds rate four times in just a 9 month period from March 2018 to December 2018, which was the fastest pace in any 9 month period since the Great Recession.The FOMC adopted a core personal consumption expenditure index (core PCE = food and energy stripped out) inflation target of 2% way back in 2012, not long after the Great Recession. In July of 2018 the PCE spiked to 2.11% after having been as low as 1.19% in October of 2015. Since December of 2015, the Fed has raised rates one quarter point 9 times,four of which came in 2018, the last time being December 19th, when the index was 1.97%.
In June of 2019 the PCE had fallen back down to 1.6%. The tax cuts were probably the reason the Fed raised the rates so much in 2018, and now that they have worked through the economy, the PCE index appears to be settling once gain below the Federal Reserve's own mandate of 2%. Cutting another quarter point in this environment would put upward pressure on the index that has been falling pretty consistently since its July 2018 peak.
The Fed raised the Federal Funds rate four times in just a 9 month period from March 2018 to December 2018, which was the fastest pace in any 9 month period since the Great Recession.The FOMC adopted a core personal consumption expenditure index (core PCE = food and energy stripped out) inflation target of 2% way back in 2012, not long after the Great Recession. In July of 2018 the PCE spiked to 2.11% after having been as low as 1.19% in October of 2015. Since December of 2015, the Fed has raised rates one quarter point 9 times,four of which came in 2018, the last time being December 19th, when the index was 1.97%.
In June of 2019 the PCE had fallen back down to 1.6%. The tax cuts were probably the reason the Fed raised the rates so much in 2018, and now that they have worked through the economy, the PCE index appears to be settling once gain below the Federal Reserve's own mandate of 2%. Cutting another quarter point in this environment would put upward pressure on the index that has been falling pretty consistently since its July 2018 peak.
You're leaving a ton of money on the table, no one is predicting a major slowdown until 2020. Scared money doesn't make money.
This. People are starting to save money. The economy needs them spending money. The rates went up fast and furious in 2018(4 increases in 9 months). People backed off on new mortgages and Refi, and Christmas buying was sluggish because there weren’t many new toys and gadgets introduced. When the rates drop, put in a pool or add on.
I’d rather have trade than aid. Each day that goes by we lose long term market share. The damage already done will take years to reverse.
The problem is more a function of Europe and China's weakness...because they have negative interest rates, there is still too much money from foreign sources fleeing to treasuries creating an inverted yield curve. Traditionally, the fed has always cut rates to address this but we have never seen a situation like today's global markets.
The real damage was done since they let China into the World Trade Organization with unrestricted trade policies. It was fine back then but now China is the second largest economy. It's time they start playing by the same rules as the rest of the world. Finally we got a president who is willing to take them on rather then curl up like a scared school girl and kick it down the road. The US has lost million of jobs to china. Business have lost billions to china for piracy. Micro Soft alone has lost 10 billion to Chinese business.
Yes the damage has been done but it was done before Trump. He's just trying to fix it and if not now when?
There are short term pain but in the long run the US wins. Maybe it's time for you to change jobs. According to the Fed's there are more jobs available then there are workers.
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