I suggest the latter. The market expectation is the former. Let’s discuss the case for a half-point.
Market Expectation for September
- There is currently a 43.5 percent chance of a 50 basis point cut in September.
- The odds were 53.0 percent yesterday and 69.0 percent a week ago.
Stage Set Silliness
The Wall Street Journal reports Cooling July Inflation Sets Stage for Fed’s September Rate Cut
I find that headline somewhere between useless and laughable, but more toward the latter.
A month ago, the odds of at least a quarter-point cut were 90.3 percent. That’s when the stage was set.
The question now is not whether the stage is set, but for how much.
Six-Point Case for 50 Basis Points
- Major Hurdle: We cleared a major hurdle today, despite the odds going the other way. Year-over-year the CPI dipped to 2.9 percent. That’s the first sub 3.0 percent reading since 2.6 percent in March of 2021.
- Fed Bias: At the last FOMC meeting, the Fed has changed its bias from inflation to balanced. That means it is treating unemployment and inflation equally. Inflation has risen 0.7 percentage points from the low.
- Recession: The odds of recession are high and rising. Few economists see this yet.
- Next CPI Report: There is another CPI report between now and the next Fed meeting. The next FOMC meeting is September 18. The next CPI report is on September 11. I am confident of a very good report, especially year-over-year.
- Last Jobs Report and Next Jobs Report: The next jobs report is September 6, ahead of the FOMC meeting. There is no reason to expect a good report but gaming monthly jobs reports is such a crapshoot that I don’t try.
- Negative Jobs Revisions: Major negative jobs revisions are coming this month. In contrast to the monthly jobs reports, I am very confident of this.
1: Major Hurdle
August 14: Consumer Price Index a Tad Better than Expected Year-Over-Year
The consensus estimate for year-over-year CPI was unchanged. I accurately called for a 0.1 percent drop but was high by 0.1 percent month-over-month.
2: Fed Bias
July 31: Fed is Attentive to the Risks to Both Sides of its Dual Mandate
The Fed is concerned about inflation and jobs. It’s the latter that will be the bigger problem in the near-term. The Fed is behind the curve in jobs.
3: Recession
August 2: The McKelvey (Sahm) Unemployment Rate Recession Rule Just Triggered
August 9: Recession Debate: Citing the Sahm Rule, WSJ’s Greg Ip Says No Recession
Few see this but I am increasingly confident. I will have an update later this week on why.
4: Next CPI Report
August 13: Ahead of today’s report I commented Expect Good to Very Good CPI Reports for July, August, and September
Year-Over-Year Look Ahead
- July: 2.9 percent
- August: 2.4 percent
- September: 2.1 percent
At the risk of looking silly, I suggest any surprises for those numbers to be to the downside.
Of July, August, and September, I was least confident of today’s number.
I am now confident of at least a further 0.3 percentage point decline in the year-over-year CPI report for August.
However, my predicted 0.5 percentage point decline may be a bit much.
5: Next Jobs Report and Last Job Report
These monthly reports are garbage, so who the hell knows about the next report. I won’t bother guessing. It’s a total crap shoot.
The monthly reports are garbage because they are based off a sampling of under 700,000 establishments, using a flawed birth-death model, vs the QCEW sampling of 11.9 million establishments.
The Current Employment Statists (CES) sample survey was 666,000 individual worksites in 2023. CES is the monthly nonfarm payrolls report.
666,000 / 9.2 million is 7.2 percent of the data. The BLS uses broken models to estimate the rest.
Heading into recessions the BLS overestimates jobs, and coming out of recessions the BLS underestimates them.
In addition, Covid wreaked havoc with the models.
August 2: Unemployment Rate Jumps, Jobs Rise Only 114,000 with More Negative Revisions
The headline jobs number was much weaker than the consensus estimate of 180,000 and the unemployment rate rose 0.2 percentage points.
July 31: Small Business Employment Growth Is Now Negative (and What It Means)
ADP data shows year-over-year payroll growth is negative 88,000 for small corporations sized 20-49. Trends are negative in all but very large corporations.
Corporations sized 20-49 provide nearly as many jobs as large corporations with 500+ employees. Small corporations are now shedding workers.
Large corporations will not be immune.
August 1: Intel Announces 15,000 Job Cuts, 15 Percent of its Workforce
Intel received $8.5 billion in Biden administration grants (Inflation Reduction Act) but announces massive layoffs and halts dividends due to a decline in revenue.
By the way, it was that last jobs report that sent rate cut odds soaring. I called for 50 basis points in advance of the jobs report.
6: Negative Jobs Revisions
July 26: Expect the BLS to Revise Job Growth Down by 730,000 in 2023, More This Year
At the heart of these revisions is a horribly flawed birth-death model used by the BLS. My calculation closely matches an estimate by Bloomberg’s chief economist [Anna Wong].
The link above discusses the Business Employment Dynamics (BED) report based on a huge 11.2 million subset of the QCEW report.
I estimated a negative revision of 779,000 jobs in advance of learning Anna Wong’s estimate.
People pay attention to the CES because it is timely. The much more accurate QCEW and BED reports lag by about seven months.
Closing Thoughts
I do not believe the Fed should have a dual mandate and I believe inflation is historically understated by excluding actual home prices.
I am commenting on what I believe the Fed will do with what I expect the data to be.
That’s the case for a 50 basis point cut. If what I suggest happens, does happen, I will agree with the decision based on a dual mandate.
However, I do not think there should be a Fed at all. The market would do a better job.
The Fed is constantly creating boom-bust cycles then chasing its own tail (and tales) to fix mistakes it made.
No cuts ,unless they want the dollar to fall more inorder to increase poverty in the US . What a mighty clusterfuck party they will have
It should be 0.25% or 24 basis points
.25 points makes no sense
Big cuts are needed to prevent retirees and their bank accounts becoming too cocky.
A large-than-expected cut would strengthen the yen, which would catch quite a few punters off-guard.
“I do not believe the Fed should have a dual mandate…”
How can the FED serve 2 masters? Neither mandate works anyway. A 2% inflation target prevents stable prices. A recession, which is part of the business cycle, destroys low unemployment. The FED then waits years for the unemployment to get back down to what they consider full. Even that is a number they pick out of a hat.
0% inflation though is a bad target. To get to 0%, you need to run a higher level of unemployment, which is typically worst at the bottom end. If you want to keep federal spending on entitlements low, it makes sense to run a slight positive on inflation. There’s also a substantial cost to labor productivity when folks lose jobs. You lose contacts, experience, skills, knowledge…. The economy is also slower to reduce prices than raise them, so there’s an asymmetry to the economy at very low inflation rates. You get hurt a bit worse when things go down than you get helped when things go up. Bottom line – A modest buffer over is healthy. The 2% is totally arbitrary, though. That’s absolutely correct. I’m tempted to argue that we’re all slighly happier at 2.5% or so. El-Erian has argued this in the past as have a number of other decent non-lefty economists.
This morning’s business report said retail sales are holding firm, no evidence of recession.
Why cut rates? Unemployment is still at was once considered normal turnover, 4 to 4.5%.
4 to 5% unemployment.
4.5 to 5.5% interest on demand deposit bank accounts.
Worked well for years.
And you believe the data ?
They better hurry before WWIII officially starts and the next tranche of maturing debt comes due. Of course, you also have the “foreign exchange tax” being paid by foreign entities that borrowed in US dollars and must convert from their home currency to dollars when paying the interest. Do you think they might benefit from a lower dollar?
Besides, what will lower rates do for employment, when it’s confidence in the future that drives investment decisions? A company will invest at 10% rates if it knows it can make a margin. The BOJ, and Europe’s negative rates for years should make the point. The collapse in confidence; driven by having self-interested Nutjobs in charge, who are becoming increasing tyrannical as they see power slipping through their fingers; is what will keep smart money off the grid.
Pontificating on Fed decisions, based on erroneous constraints, is a about as useful as predicting how a politician will vote. Politicians pretend to care about the Constitution, rule of law, and democracy, just as the Fed pretends to care about max employment and stable prices. You might as well spend your time explaining when you stopped beating your wife.
The Fed does not need to be abolished because it stopped functioning as intended, when it would make money available to regions of the country and COMPANIES during tough times, not the Federal Govt. It’s like saying we should toss the Constitution in the garbage because politicians and bureaucrats ignore it. No, it’s the occupants that need to be thrown in the garbage.
Serious money cares about the Invisible Hand, not the Fed.
Jobs are important, but wages falling behind inflation doesn’t show up in the jobs numbers, but is quite relevant to standard of living.
Too much inflation, not enough deflation. Leave rates unchanged..
Absolutely agree with you. Way too much inflation, but printing a trillion dollars every 3-4 months cannot be stopped with current rates or any rate hike. We’re doomed. Enjoy the roller coaster down.
The longer they wait to cut, the higher the market will climb. Fed is mostly irrelevant at this point with such massive treasury issuance. Yellen trumps Jpow.
The US economy is divided by two : one for the top 1% and the other one for the rest.
The rich control the gov. Since Oct 2008 the Fed suppressed mortgage rates and bond rates, making the top 1% richer and even more powerful. Most bank’s assets are in RE, stocks and bonds serving the top 1%. C/C and car loans are for the rest. They are small portion of banks assets. Since 2020 TLT and commercial RE are down. Higher interest protect small innovation co from being absorbed by monopolies. Cutting rates a little to finance industries instead of RE, stocks and bonds will increase demand for highly skilled workers. Higher wages fills gov coffer. Lower gov debt ==> freedom from the top 1% shackles.
So how do income taxes play on CPI & other inflation data? From my memory, I believe that they are considered a “pass thru” number & are “theoretically” included in consumer prices, which of course is hogwash.
Good job Mister Mish on George Noory’s show tonight. I loved your comment about a “mixed bag” as far as lower interest rates and recession conditions.
At least the worst is over for the investment grade bond funds that make up a lot of individual retirement accounts (until the next inflation cycle).
I think it will be 25bp. But if the markets are crashing by then, it will be 50bp or even 100bp.
Multinational groups from Volkswagen to AB InBev and L’Oréal have sounded the alarm about demand in China, with the effects of a slowing economy exacerbated by shrinking appetite for foreign brands and intensifying domestic competition
In results this week WPP, the London-listed advertising giant, cited a near one-quarter drop in Chinese sales in the past three months, a poor outlook in the country and signs of consumer caution.
https://archive.md/ei4WG
Can’t wait till the shit show blows sky high!
The world’s largest steelmaker has warned that Chinese producers are in a fight to survive a severe and more protracted “winter” than previous downturns, as the property market in Asia’s largest economy suffers a crippling multiyear slump.
The steel industry “winter”, or crisis, was likely to be “longer, colder and more difficult than we expected”, said Hu Wangming, chair of China Baowu Steel Group, on Wednesday, according to a company statement detailing the firm’s recent meeting of half-year results.
https://archive.md/KgwCu#selection-2375.0-2379.267
Mish, I believe you are underestimating “animal spirits”. Things are going to go nuts, mostly to the upside, with just a quarter point cut. The Fed knows this. They may even cut by quarter point, then pause.
Agree 100%. I actually think a quarter-point cut might even be better for the market than a half-point cut. It will reinforce the “soft landing” theory and not induce a recession panic the way a half-point cut would.
Not that I think a recession matters anyway, at least not to the mega cap tech stocks that are driving the major indexes. Maybe some retailers will get hit by a recession.
Even though there’s a duration mismatch with the fed funds rate, I have started building a position in BLV to take advantage of falling rates. And it pays a decent yield in the meantime.
I don’t know but all this rate cut hype in the media seems to have ulterior motives to me, like maybe wall street wants retail investors to buy in so they can unload their stocks at high prices, so I say beware. I’m against any cuts but if they happen I hope to get rid of my in the red bond funds that I mistakenly bought a while ago. We also need more money destroyed by the Fed as all that printing was a huge mistake.
I will go out on a limb here and say no recession in 2024. 2024 is going to look pretty come mid-2025. The debt issue is no longer avoidable and regardless of who wins the election, they might wish they hadn’t. We have been extending and pretending since at least 2009 and possibly since the late 1990s.
When I see advertisements still on trucks for workers, then I know the job market is still hot. Prices on products still going up or stable after 50-100% hike and houses still selling like hotcakes. Please. These economists (cough, cough) don’t know jack. Then you add fuel of printing money. Tough times ahead.
Cutting would be a bad move here and not do much for anyone. They aren’t going back to historic rates anyway. May as well keep inflation going down and a low growth economy. Inflation is still above 2%.
Cfnai-ma3 says neither great expansion nor contraction but just meager growth around 1%. Cutting here would be too soon imo. The Fed has privately stated it is okay with unemployment between 5-6%. Even if they cut under these circumstances it isn’t going to stop unemployment from rising. Most companies that are failing and laying off heavily are doing so bc or bad strategic choices and bets made long ago.
At the end of the day, the recent disinflation has a flavour of ‘déjà vu all over again’ because if the FED capitulates on its 2% inflation target and embraces the political and Wall Street narrative that a rate cut is now needed in September, the US will most likely see inflation reaccelerate just like in the 1980s, and Jerome Powell will be remembered as the Arthur Burns of the 21st century.
This second wave will push the US into the ‘inflationary bust’ phase of the business cycle (i.e. stagflation), if it is not already the case. This means that people will buy even less for even more and this environment will be painful for those who are still blindly following the ‘Forward Confusion’ narrative of Wall Street.
https://themacrobutler.substack.com/p/just-a-disinflationary-illusion
“Will the Fed Cut Interest Rates by 0.25 Points or 0.50 Points in September?”
doesn’t matter. cutting rates won’t change our economic trajectory. the damage & destination are already “baked in”.
rate cuts may help some residential home buyers/sellers in the short-term… a brief flood of overdue RE transactions… that’s the sum total impact that rate cuts will have, imo.
in any case, Powell will not cut rates down to 0%… or even 1-2%. Powell will keep rates well-above his western CB peers. Powell wants to attract/bring every cent of western capital into US markets/assets. in the end, the Dollar will be the last western fiat currency standing. that’s just about the best outcome that Powell can hope for.
It’s an election year. The Fed will thread the needle with only 25 bips in September and I’d bet my wife’s life on it.
We don’t need a soft landing, we need a recession to clean up the monetary/fiscal excesses of the past 3 – 4 years.
What we need is for both sides to seriously cut the debt. I am not holding my breath.
@Manny…You have my deepest condolences if holding your breath. Where do I send flowers?
Recession fix would prompt additional fiscal stimulus. There goes that theory out the window.
The currency has to be backed by something in the Periodic Chart of the Elements. Once the French seized all the land of the Church to back its paper when no one would accept it. Just a peasant here, trying to get ahead of the inevitable.
Polonium?
Substantial value in the Espionage business when eliminating enemies and threats
Putin must have a lot of it!
He’s got a lot of the smallest violin, now.
Uranium?
Lots of opinions. All meaningless.
J Siegel wanted an immediate 0.75% a week ago and another 0.75% in September.
D. Rosenberg expects cuts up the wazoo as the economy crashes.
Mish expects 0.5% in September. He also wants the Fed gone (unlikely).
For giggles; I will say 0.25% in September. Not that I really care.
The Fed exists.
It doesn’t matter what people think it “should” do. It will do whatever it wants.
I’m still laughing at the comments a week or so ago about the stock market “finally” beginning its crash and the depression starting when it dropped a bit. People love to talk Doom and gloom. I guess that is why they are too afraid to invest.
Personally, I posted about 7 oil stocks I was buying on the dip. I even gave the prices I was buying at.
Another commenter even created a google docs spreadsheet called Falling Knife to chronical my terrible investment decisions. Hopefully he will post a link to it again in response to this comment. All 7
are doing great!
Regarding Mish’s Recession call. He may very well be right with his Sahm/McKelvey rule.
However, I prefer to use the Presidential indicator. Every Republican President since 1920 has had a recession begin on his watch. Several had two recessions and one of them presided over 3 recessions. 10 Republican Presidents. 14 Recessions. Seems like a pretty good indicator.
So; if Trump wins, then I will expect a recession soon after.
Trump cannot win. It’s obvious when Biden, Harris and Schumer are all vehemently against proof-of-citizenship to vote. There is only one possible reason to support this position.
Don’t care. Believe whatever cult conspiracy crap you want. Will you be part of the next insurection when he loses? Got your guns and ammo ready?
That’s the tragedy. People like you are so full of obsessive hate for one man, you don’t care about fair elections and democracy. Sad.
Hate? Lol!
Hate for who? I love everyone! You got the wrong guy Navy.
and they are against the Voter ID Bill passed by the House. We all know why.
Not Kennedy, LBJ, or Clinton.
https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States
“…It doesn’t matter what people think it “should” do. It will do whatever it wants…”
Ding ding we have a winner. Reality is tough pill to swallow for alot of people.
The Falling Knife index is up 7.96% since August 5th, “crash” day. As well, the S&P 500 is up 5.19% since the August 5th close. Although I bought a little FANG, my only oil stock, my big buy that day was NVDA, which is up almost 20% in like six trading days lol!
Mish is a permabear and his site has a decidedly “glass half empty” slant. I used to be that way too, listening to losers like Peter Schiff and Zerohedge. Since 2019, I switched to being a perma-bull and have never been happier or wealthier.
You’ve got to trade the market you have, not the market you want or think is ideologically right. Clearly, stocks want to run and the upcoming rate cut is going to be the fuel for the next leg up. I think it’ll be a quarter-point, BTW, so as not to spook the market or seem overly political.
Honestly, WHO CARES if there’s a recession. Main Street and Wall Street are so completely and utterly disconnected that a recession won’t even matter. So many people are rich from stock market and home equity, anyway. Who needs jobs?
Well said. Congrats on NVDA!
Presuming your statements are accurate, congratulations.
The transition from the way things used to be (buy stock as an investment into a company that either pays a dividend or one expects to grow) to the way they are now (buy stock in the hope that one can flip it to someone else for a profit) has rendered a lot of old investing guidelines moot. It is possible to profit in any economic condition these days, but it is not possible for all or most to profit.
As if anybody cares what J Siegel wants
Or what dozens of other prognosticators want. Yet there they all are, trying to say that they know more than the Fed.
Even the guy who appointed Powell.
the perma bull….
2001 was actually Clinton’s recession. The FED raised the rate to 6.5% into May 2000, resulting in the 2001 recession.
Additionally, Calvin Coolidge, a Republican, became president in 1923, did not have a recession. He presided over the Roaring Twenties.
Nope. The recession of 1923-24 began during Coolidges term.
Doesn’t matter how you try to spin it. The record shows that the last time a recession began during a Democrat President was Carter. Every recession since then was under Republican Presidents.
The Fed wasn’t following Milton Friedman or the Austrian econ.The Fed responded to exogenous events in 2020 by transferring money from the rich to the poor. Trump paid the poor and the unemployed to buy food. The gov saved renters from evictions (eviction moratorium). Rent, mortgages and debt were deferred. The impaired were treated for free. The rich were prevented from owning tens of million serfs in a feudal US.
Twenty reds !!
Opposite. Peanuts were thrown at the masses, while gold bars were handed to the ownership class.
It will add to the long list of mistakes if the Fed cuts this year at all ! We need a good old recession , we need to get rid of the deadwood in the forrest ! And BTW, no more Bailouts EVER, for anything and anyone! NONE!
Blahhahahaha …. just cozy up to the swamp and get your handout. Policy improvement — proactive handouts reduce bailouts …
Latest handout to big pharma (via Medicare Part D). IRA has a $10,000,000,000 subsidy to offset big-pharma big-prices (capping seniors out of pocket at $2000)
https://www.kff.org/medicare/issue-brief/millions-of-people-with-medicare-will-benefit-from-the-new-out-of-pocket-drug-spending-cap-over-time/
https://www.americanactionforum.org/insight/cms-puts-part-d-on-life-support/
Yeah, Mish used to clamor for “healthy deflation”. All of a sudden, he has switched sides. If there was *ever* a time we have needed ” healthy deflation”, it is now, after a huge run up in the money supply has distorted everything!
Other than a lot of hype … cutting the interest rate isn’t gonna do much for the economy …
Good to know. We would all appreciate if you would just tell us how events unfold over the next 6 months or so and which investments do best. Also, can you tell me who will win the World Series and the Superbowl? I would like to place some bets.
MIsh, as a long time gold investor I hope you’re correct. Let’s get this game moving and drive gold towards $3000. I’m sure the Fed is also politically influenced, regardless of their claim of independence.
Mish, 700,000 establishments surveyed is highly statistically significant and the birth-death model, which even the Feds admit is flawed, is the best we got.
The problem with the birth-death model is that it’s most flawed exactly when everyone assumes it’s reliable: when the economy turns a corner. Only real geniuses could design a system like that, that lulls everyone into complacency and trust when everything is moving along, only to be completely wrong when it matters the most!
I don’t see the case for ANY rate cut, given that core inflation is 3.2%. If they do it, I think it will be in reaction to anther ugly U3 report, but the risk of stagflation outweighs the benefit of a rate cut, IMO. Even if U3 goes to 4.5%, which I suspect it will — maybe even 4.6% — that’s not historically high.
They should stick to their guns and get core inflation back down to 2% before easing. To me, this is a test of their intestinal fortitude. A rate cut would be premature and even cowardly, IMO. Beyond that (well, as part of it) Congress must get a handle on spending. Their profligacy has been out of control for far too long. It is time to bite the bullet while it’s still possible.
I concur. Odds of any rate cut at all in September are nowhere near 100%, there is too much potential for the unexpected to happen between now and then.
I wasn’t predicting what they will do, but only saying what I think they should do.
Shouldn’t there be a true capitulation in stocks before any rate cuts? Otherwise won’t the Fed heroin just encourage more of the same behavior that got us here?
The Fed does not pay attention to the stock market. It only acts according to its dual mandate (cough, cough, wink, wink).
But chasing its tail sounds like what you and too many others are advocating as you push for 1/4% changes in the FED interest rates based on a single months worth of data that regularly gets updated in subsequent months. Why not wait 6 months and see if the trend holds?
But then people would complain that the FED didn’t act quick enough (chasing its tail) if something didn’t pan out. Damned if you do, damned if you don’t.
GDPNow predicts 2.9% growth for Q3!! We need 12 rate cuts, stat!!!
With the Fed it is always “the stairway on the way up, and the elevator on the way down”.
Will the Fed lead us into a deeper recession near depression or higher inflation to hyper inflation?
It’s not at all about the number, but the $$. It will be .5 because they can, and so they will. Spend like crazy, to get the WH back or leave Trump with debt up the #&* and nowhere to go…
Twisted but possibly effective?
The Fed does not lead, it follows the bond market. The Fed simply reacts to whatever the 2yr bond does. That is why it is always behind the curve. The economy is already in big trouble, and the falling 2 yr rates are telling you that.
By the time the Fed reacts, and the lag time it takes for the rate cuts to effect the economy, it is too late. In addition, the amount the Fed is going to be able to cut is problematic.
The US Government is spending money it does not have at an unsustainable rate. The reason it is unsustainable is that the pool of treasury bond customers is declining.
US sanctions policy has made foreign investors wary to invest in US debt markets because the US has demonstrated it can and will steal that money any time it wants. In addition, the carry trade from Japan is waning.
Furthermore, the deteriorating economy will make other assets such as post crash equities and real estate much more attractive than Government debt.
All of this means the US Government will have more and more problem financing its massive debt, will have to pay higher interest rates, and makes the possibility of default more of a reality, further eroding confidence.
Of course if things really get bad, they can do as they did in 1933 and just steal from the Citizens to get the money they need.
I agree with everything you said but that had been true throughout the entirety of the great bond rally in human history.
At some point, I expect a mandate that all 401ks must have 10+% US treasury bonds in the portfolio–for the retiree’s safety in these turbulent times…. fixed it
Will we ever get a failed (not covered) Treasury Auction?
Unfortunately we won’t since Primary Dealers (basically govt owned) will jump in at least initially … then the Treasury will backstop any bond losses … on top of HTM accounting.
If the auction is “sticky” the Treasury continues to raise the interest rate during the auction until the bonds do sell. This is what is referred to as an ugly auction.
Again, you have no idea what you are talking about. It can get much worse than “ugly”. Currently, yes, auctions are “covered” at some yield, even if they get ugly when the yield required to sell all the bonds is higher than the pre-auction yeild. But it’s entirely possible to have auctions where there literally are not enough bids at any yield within the range the treasury is willing to pay. Such have happened historically many times, especially in other countries. Obviously the Treasury will do anything in its power to avoid this, because when it happens it destroys confidence across the entire bond market. But ‘it hasn’t happened” is not the same as “it cannot happen”!
That’s what the Cayman Islands are for.
I am afraid it is you that does not have a clue what you are talking about. The US is not Zimbabwe and you will never see the day when US debt is not marketable, it is simply a question of yield.
In the final analysis, the faith and credit of US debt is predicated on its military power. When push comes to shove, the US will simply take whatever wealth or resources it needs to back its credit rating.
The only real question is who they will take from. What you fail to realize is that the Federal Debt is not the US Governments problem, it is your problem.
It is the US Citizens that are ultimately responsible for the debts the traitors in Washington incur. It is not Joe Biden’s debt, or Nancy Pelosi’s debt, it is your debt. In the event of a debt crisis, the government will confiscate the assets of both Citizens and foreign governments to recapitalize the government. They did this in 1933, and they will do it again.
The US Citizens have allowed their government to get out of control, and the US Citizens will be the ones who ultimately pay the price for that dereliction of their duty to keep their government in line. They will pay with both their own wealth, and the lives of their children and grandchildren as the US goes to war to refill their coffers….
This is laughably incorrect. Anyone who followed the bond market for the past 3 years knows that the bond market has failed to predict its future rates, and certainly didn’t predict the Fed’s actions.
If you want to argue otherwise on this site, you’d better come with actual data.
My reply was apparently censored….
I guess putting links to FRED are not allowed.
A rate cut at this point will cause more structural problems than it will solve. It will exacerbate carry trade volatility, reduce housing affordability, and then, there’s the big one…
Bank of America CEO says research team ‘does not have any recession predicted anymore’
by Nick Robertson – 08/11/24 3:18 PM ET
The CEO of Bank of America, Brian Moynihan, said that the financial giant no longer believes a recession is on the horizon for the American economy, hinting that the Biden administration and Federal Reserve have achieved a “soft landing” after inflation troubles in recent years.
Moynihan told CBS’s Margaret Brennan on “Face the Nation” Sunday that while the economy is slowing, consumer spending remains in line with prepandemic levels.
…
https://thehill.com/business/4822935-bank-of-america-ceo-says-research-team-does-not-have-any-recession-predicted-anymore/
Yeah… and the vaccines are safe and effective.
Did you know that two consecutive Fedric cuts is considered a panic?
Yes
Okay… you are cheating a bit here. It should be the odds as they stand, but you are betting on a better–really, you say, with certainly an improved CPI in Sept for your fifty. So, if it does come in better and there is no cut, you can say it wasn’t good enough. If you base your prediction on their reputation, you should say they are too embarrassed to raise that much. If they go .50, the political pressure is off for a while, which is the more significant impact. They are in trouble, and a higher number makes last month questionable. But their reputation is already in the tank.
They will cut very little. The old folks who like their interest and will vote for democrats will need the interest till after the election. Then in 2025, inflation.
Wall street wants 50 basis points. This is what it will be.
Have to get the S&P to at least 6000 by year end.
That is not how it works, look at this chart. https://www.macrotrends.net/2015/fed-funds-rate-historical-chart Historically, whenever you have a major hike in interest rates, as the chart shows, the subsequent decline in interest rates signifies an economic recession is imminent. The Fed does not lower rates because the economy is strong, they lower rates when the economy is heading towards recession. All the people who get excited about lower rates and think this is the time to invest are going to get their heads handed to them.
Wall Street has wanted, hinted at, propagandized, gaslit and advocated for rate cuts for the past 2 years. Now is not different.
The inflationary depression will barrel on just the same. Some bloaters and gamblers will be pleased tho.
Just mail me cash and it will work better.
.5% easily…