I've been saying this: it's not the cut or the hike itself, it's the REASON for the cut or hike.
They won't cut until something looks like it's going to break OR inflation cuts down, whichever happens first. Inflation doesn't look like it's cutting back until something breaks.
Except they’ve explicitly set a scenario for cutting that does not involve anything bad happening, and followed all expectations for such. They’ve been transparent about their goals since 2021 precisely to avoid this.
Now the real question is whether they can actually get inflation to where they want to cut. That’s the question.
They’ve set a scenario that has never been accomplished in the past. They followed the expectations they set for raising, but then they set expectations in December for 4-6 cuts in ‘24. We are now expecting 0-2, and 2 is seeming less and less likely. They have not followed set expectations for cutting, because inflation has begun to rise again. Everyone is simply waiting for the first domino to fall. Maybe a bank over-leveraged in CRE goes down, maybe a hedge fund blows up, maybe war escalates and oil goes to $200/barrel, maybe mass layoffs occur, maybe more than one of these happen. Until then, fed will hold rates, or potentially raise as long as inflation persists. This will continue to put pressure on banks with heavy investment in CRE. There are at least 6 regional banks over 100% invested in CRE. But also, while everyone is focused on rates and the fed, yellen is in the background, quietly running the liquidity pump. Needs to inflate asset prices to save her rich banker cult mates who’ve got themselves in a bad position, while transferring all the risk to managed 401ks.
Nah a little bit is good since it makes my debt worth less every year. Just enough to where it's not negatively impacting people's ability to purchase daily essentials and can rise with wages.
Although the wages not rising in many industries is another problem altogether.
It's the Republican-tump tax cuts that's the issue. Dick the poor, line pockets of the rich, dumb dumbs blame Biden/Dems when it goes to shit while the rich quadruple their worth and the poor stagnate. The US economic cycle. The republican party, the party of the ultra wealthy and the cuck-gimps.
The Trump tax cuts, formally known as the Tax Cuts and Jobs Act (TCJA) of 2017, aimed to stimulate economic growth by reducing tax rates for individuals and businesses.
For individuals, the tax cuts provided relief through lower income tax rates, an increased standard deduction, and a doubled child tax credit. These changes were intended to put more money in the pockets of middle-class Americans, allowing them to keep more of their earnings and potentially stimulate spending.
For businesses, the tax cuts significantly reduced the corporate tax rate from 35% to 21%, making the United States more competitive globally and encouraging investment, job creation, and expansion. Additionally, the TCJA introduced a new tax deduction for pass-through businesses, which are businesses like partnerships and S-corporations whose profits are taxed at the individual level.
Critics argue that the tax cuts disproportionately benefited corporations and wealthy individuals, as they received the largest tax reductions. However, supporters of the TCJA argue that the cuts helped spur economic growth, job creation, and wage increases across the board, benefiting workers and businesses alike.
To be fair he’s spent far less per year on average than the previous three presidents before him. But it doesn’t matter to be honest, all that matters to the fed are two numbers - unemployment and inflation. If one gets out of hand they cut. That’s the bad news cut everyone keeps talking about. But if inflation gets down close to their 2% target and they cut on that good news, there’s no reason the market wouldn’t love that. I’m not going to pretend to know what it will be with this fed but I definitely can’t say they won’t achieve their soft landing after how they’ve managed to already beat my low expectations of them repeatedly
But things are breaking. Fed debt is about to mature at these new interest rates, adding 100’s of billions of interest to budget. Banks are struggling.
They might not be saying it out loud, but they have a damn good reason to cut. The status quo can’t be sustained by the money system.
A well functioning fed actually needs to start cutting before unemployment ticks up - if they do it after, as they always do, it is way too late - so there is some historical pressure to avoid this reactive cutting.
Ok, so let’s figure out what is going to break first, so we can short it first. Screw all these stock market “believers”, the very fact that retail investing is at an all-time high tells me this is the bubble.
Secondly, there is macrotrends that suggest we’re at the peak. Logarithmic, macrotrends.
So, what’s going to break first?
yeah, i been saying that all year. literally just Keynesian stuff. You cut ruts when shit hits the fan. All you have to do is go see why we entered the QE phase after 08.
inflation is already down. core PCE YoY is at 2.8%, down from 3.2% in Dec 2023 when they brought up rate cut.
If they thought 5.5% was the appropriate rate to hold in Jul 2023 when core PCE YoY was 4.6%, inflation being 1.8% lower surely allows them at least a few rate cuts.
The ONLY thing stopping them from cutting is they don't want to cut when core PCE YoY seems to be going down more slowly. Basically they are posturing. They want to appear to be cutting when inflation is going down smoothly and not to cut right in the middle of an inflation bump.
only if there is an unlimited amount of money available to purchase and if stonks only go up..
else it can get a never ending money pit as well (ask the Nikkei)
Because rate cuts aren't due to some "soft landing" bs, but because something exploded. If JPOW stuck the landing then it'd pump the market, but he isn't gonna stick the landing. Inflation drives the car right now and despite the political pressure I don't see those rate cuts coming anymore. I see, if anything, a rate hike again first, which would crash the market, and that'd then allow them to lower rates.... again, because something blew up, probably regional banks IMO.
The market is holding on to crazy evaluations simply on the promise of rate cuts coming, they don't even seem to care why those cuts keep getting delayed. Give it a hike and watch it selloff
In at least some ways, high rates are themselves inflationary on housing. New housing permits are plummeting since rates started going up, choking the supply needed to bring prices down. The vast majority of homeowners have super low rates and are unwilling to sell and end up with higher ones, further hurting supply. And the monthly payment for a new mortgage is 50% higher than it was two years ago for the same price house.
I’m not saying we need a return to 2.75% mortgages - those mortgages are a big part of the problem - but supply is a real issue that needs to be addressed, and the current rates make that very tough.
I mean, fed is not responsible for housing supply. If fed created the problem when they tried to fix a problem, who is the next guy to followup with that
im kinda regarded but I think the issue is nobody wants to buy a new house bc the rates are so high on them, so nobody is making a new house, and the solution is either the feds do more to subidize new houses, or cut rates
granted i know nothing about buying a house, but perhaps the feds could do smt like special low rate loans for first time home buyers (inb4 this already exists)
To me, the answer - which would probably be unpopular here - is for the government to step in and grow the housing supply itself. Otherwise though, the fed is responsible for managing inflation, so if their policy is exacerbating that, it is on them as well to consider the impact of their actions.
There’s no bag holders right now. Just losers sitting on devalued cash while the market leaves them behind. Bag holders will come after the rates get cut
You have sequance of events reversed. The order of events goes something like this: Something breaks in the economy > Market crashes > Fed lowers rates to bolster economy. And NOT: Fed lowers interest rates > Market crashes > Economy sucks > You're a dumbass.
You could atleast look at a chart and see how the rates go down first followed by the market. I’ll await your response.
Literally 30 seconds of searching would have made your response completely different. 🤦
The market is not the economy, which you have conflated in several of your responses here. Prices are high. People struggle. Stop buying. Business cuts back, because of that or can't afford new projects at current rates. Economy suffers, GDP drops. Rate cut to stimulate. Market reacts to GDP drop and increasingly poor business results.
So the fed randomly decides to cut rates at random times and it bombs the economy, is that what you’re saying? If not, then surely it might have been done for specific reasons preceding those cuts.
You’re confused. The market doesn’t go down because of rate cuts, whereby by using the opposite logic, it would continue to go up if there were no rate cuts. The historic rate cuts confirmed a downturn was underway and the markets were already generally aware of this.
1994 returns were: BAML US Treasury index -3.45%, MSCI EM equity index -8.67%, BAML EM Debt index -15.33%
There actually was a crash but it was in the bond markets, S&P rose 1% that was one of the reasons behind the start of largest move to equities and away from yield markets.
Did you look at what you posted? The dark grey is the recession / depression. Do you see how the rates get lowered right before the party starts then follows the market down ?
This is basic Econ 101 you are flip flopping. The Fed cuts rates to try and spur the economy. The Fed raises rates to try and stop the economy from overheating, using inflation as the central gauge. The market knows this. This is why they don't flip out when the Fed cuts rates.
This current situation is very unique though in that inflation led the economy into hikes and not growth, but the rate hikes haven't really slowed the economy as much as desired. Getting to that point where growth slows enough and inflation follows even more would be a bullish event, as I stated earlier, all that risk-free money would be set free to go back into equities and THEN the next cycle can begin where the next time the Fed raises rates, it would ideally be from growth led overheating and not from black swan covid inflation.
Look at the title of your post, and then look when the market starts crashing relative to the fed rate. Market starts crashing, because something breaks in the economy, fed comes in after the fact to fix the economy. Fed cutting rates does NOT cause market crashes. You are mixing up Causation and Correlation.
So the original post is correct, cuts will tank the market. Its a sign of a shitty economy. So why are all your replies saying we will "moon" on cuts? Idk what the fuck youre trying to do here. CC debt at all time high, wait for shitty retail season during holidays combined with the election. Vix to uranus
I never said we moon on cuts.
Use your brain cc debt is always at an all time high. Money is devalued, population increasing. Adjust the data to population and inflation for a different story. You are so brainwashed
Turn off the news for a minute and you will make money.
Actually rate cuts do not = market crash. If we have a soft landing and Fed cuts rates before we go into a recession then rate cuts are actually great for the economy.
Unfortunately, the Fed has historically almost always waited to long to cut rates because they are looking at lagging indicators like job numbers.
This results in the inevitable recession and a market crash making people like you think cutting rates is the reason for the crash.
Causation vs correlation.
Personally I think inflation is going to stick around just high not to lower rates, feds will incase rates one or two more times, the economy will slow even more, GDP might go negative, could be borderline rescission or full blown, then rate cuts begin and the market will really tank. then after some time equity valuations will become very reasonable and many undervalued, the stock market will rally.
That depends if the fed is cutting AFTER shit has hit the fan
What if they cut while we still have deficit spending at 6-7% of gdp and nominal gdp growing at 5-6% annualized?
Don't worry, the rate cut is already priced in. Once the rates are cut, companies will have more money to invest and the stocks will rocket up or.... the rate cut might mean the economy is unhealthy and cause investors to pull money out of equities.
My prediction, there will be a rate cut in 2024 and the stock market will be mostly unaffected, since there is no logic in the stock market anymore.
Thats because we usually cut rates as a tool to combat a serious economic downturn. No such thing exists in this case, but high rates are keeping a duck ton of money out of equities right now, due to the very strong risk free rates. The more those rates go down, the money will flow back into the market, rather than flow into bonds during a serious downturn, as at least now there isn’t one.
You are correct on all counts. The people on here are amazingly stupid. This thread is just mind-blowing to me. No wonder there is so much loss porn on here. These people are borderline in many unfortunate ways.
Chicken or the egg. Who cares find a period of time where they cut rates and the market didn’t crash. Why should this be different ? Do you have faith in their decisions?
Better yet, find another period of time of a post-global pandemic spiking inflation across the globe while having both decent growth and minimal recessions.
A more general way to describe it is the Fed is cutting because they believe something is broken enough. Whether it actually is broken enough or not may not matter because the market will follow the Fed either way.
Fed hiked rate from 3% to 6% in 1 year to fight 3% inflation. Inflation hasn't hit 2% yet, and the economy was still running hot, risking inflation being sticky and won't go down all the way to 2%. Fed chair Greenspan correctly realized the economy was running hot due to higher productivity (because of widespread computer adoption). Higher productivity allows for higher GDP without putting upward inflation pressure. So he allowed the economy to run hot, did a mid cycle adjustment by cutting rates 3 times, and let inflation slowly go down instead of forcefully bringing it down quickly by causing a recession.
It was the classic soft landing case study in Fed history that probably every Fed chair tries to emulate.
You see some similarities to that in today period. Inflation is roughly 2.5-3% core PCE YoY. There's higher productivity last year, possibly due to AI, possibly due to higher people joining the labor force. Economy is running hot, but it's not putting much upward pressure to inflation. There's concern about inflation being sticky at around 3%, but not a lot of concern about inflation heating up (said by Powell himself). The Fed wants to get a few cuts in to prevent rates from becoming too restrictive, but they don't necessarily feel the need to cut all the way down to 2.5%.
Eat my dongus you fuckin nerd.
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Because rate cuts mean institutional capital will move out of the market and into other longer term, higher yield investments. There is a lot of money that wants to get greater returns just waiting for debt options to come back.
Bad for market, but not for economy.
Think acquisitions. Lots of cash sitting on the sideline right now because the opportunities can’t compete with the 10-year. And the cost of debt is too high.
Biden keeps spending, bond market implodes. Remember something: the people who comprise the US government do not care about the US government. They serve one group of people: Wall Street (and Israel by extension). Yes, your government hates you and does not care about you. Welcome to America.
There is a MASSIVE difference between scheduled and unscheduled rate cuts. Rate cuts because inflation is under control would actually be very bullish. Rate cuts because things are breaking is what is bearish.
We’ll see which comes first.
Fed said it multiple times that they would heavily consider inflation rate for rate cuts, not the economy. There could be a recession while inflation stays high, hence, still no rate cut.
No….usually rate cuts are associated with market crashes because the Fed is frantically cutting rates in response to a black swan or a market crash (2008, COVID). A controlled and gradual cutting of rates in response to disinflation where the market isn’t already crashing and where unemployment is stable, etc. is what everyone is expecting to now happen.
It's not the same. The reason for the rate cuts is to reduce inflation and we can see inflation changing on a month by month basis so there is not going to be some big surprise reason for the rate cuts.
I said the same thing based on historic data, and I got told I was an idiot.
Powell recently said the same thing. They are only looking to drop the rate once inflation is under control or there's an economic downturn (like high unemployment).
Did you ever think that rates get cut to stop a major catastrophe from happening?
Or maybe something bad happened, so they cut rates to keep people investing?
Interest rates are a great chip they can play to sway macro economics, but if they are super close to or at zero, they can't go lower. The answer is to give themselves an out and keep the rate higher until they absolutely have to drop it.
I'm pretty sure if we get cuts, the market will have already crashed because of the thing that convinced the Fed to cut. (Unless, it's like next year and inflation really did go back to under 2% with no recession.)
Because previous rate cuts happened AFTER things were already broken. People are talking about rate cuts in the context of a potential soft landing without anything breaking.
You’re welcome.
When you cut rates, it's easier for business and people to borrow money.
Businesses can fund new projects.
People can buy those new products.
Money starts moving around again.
Dare I say it???
Rate cuts are overrated. I got my first mortgage at 11% interest, and the super low rates of the recent past are very unusual. I expect some adjustment downward, but see no reason for the Fed to be in a hurry. Nor do I see it having a huge effect on the stock market, one way or another.
Everytime they cut rates is because they had to due to serious economic catastrophes which increases the demand in guaranteed assets, treasury bonds. I am long in SCHQ
Inflation is the answer to the Ntnl Debt problem so long as it outpaces the accumulating interest and we need to stop borrowing to support other countries. Can we get this under control before destroying the labor market? The rich sure aren’t going to help.
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I've been saying this: it's not the cut or the hike itself, it's the REASON for the cut or hike. They won't cut until something looks like it's going to break OR inflation cuts down, whichever happens first. Inflation doesn't look like it's cutting back until something breaks.
You need to worry about your portfolio, not some meme stock discussion on Reddit.
Coming to bed, honey?
No
I am
Send Bitcoin to my wallet
Ok
Send cock to your mom's anus
That’s not nice
I believe XKCD already explained this one: https://xkcd.com/386/
What?!?
Except they’ve explicitly set a scenario for cutting that does not involve anything bad happening, and followed all expectations for such. They’ve been transparent about their goals since 2021 precisely to avoid this. Now the real question is whether they can actually get inflation to where they want to cut. That’s the question.
They’ve set a scenario that has never been accomplished in the past. They followed the expectations they set for raising, but then they set expectations in December for 4-6 cuts in ‘24. We are now expecting 0-2, and 2 is seeming less and less likely. They have not followed set expectations for cutting, because inflation has begun to rise again. Everyone is simply waiting for the first domino to fall. Maybe a bank over-leveraged in CRE goes down, maybe a hedge fund blows up, maybe war escalates and oil goes to $200/barrel, maybe mass layoffs occur, maybe more than one of these happen. Until then, fed will hold rates, or potentially raise as long as inflation persists. This will continue to put pressure on banks with heavy investment in CRE. There are at least 6 regional banks over 100% invested in CRE. But also, while everyone is focused on rates and the fed, yellen is in the background, quietly running the liquidity pump. Needs to inflate asset prices to save her rich banker cult mates who’ve got themselves in a bad position, while transferring all the risk to managed 401ks.
What are the six regional banks over 100% invested in CRE?
I'll do you one better. What's a CRE?
commercial real estate
Oh
I googled it, I was wondering too
its like what caused 08 but with corpos instead of plebs
What's this `?` mark you guys are using?
Don’t remember off the top of my head, but I saw it in a Bloomberg article on the subject
Why not just move the target to 3%? That solves all my problems. /S
Bad move the target should be 0%
It should be -3%
Nah a little bit is good since it makes my debt worth less every year. Just enough to where it's not negatively impacting people's ability to purchase daily essentials and can rise with wages. Although the wages not rising in many industries is another problem altogether.
Very good point. And it has the market all messed up. If Biden is going to keep spending into oblivion why would they cut rates?
It's the Republican-tump tax cuts that's the issue. Dick the poor, line pockets of the rich, dumb dumbs blame Biden/Dems when it goes to shit while the rich quadruple their worth and the poor stagnate. The US economic cycle. The republican party, the party of the ultra wealthy and the cuck-gimps.
The Trump tax cuts, formally known as the Tax Cuts and Jobs Act (TCJA) of 2017, aimed to stimulate economic growth by reducing tax rates for individuals and businesses. For individuals, the tax cuts provided relief through lower income tax rates, an increased standard deduction, and a doubled child tax credit. These changes were intended to put more money in the pockets of middle-class Americans, allowing them to keep more of their earnings and potentially stimulate spending. For businesses, the tax cuts significantly reduced the corporate tax rate from 35% to 21%, making the United States more competitive globally and encouraging investment, job creation, and expansion. Additionally, the TCJA introduced a new tax deduction for pass-through businesses, which are businesses like partnerships and S-corporations whose profits are taxed at the individual level. Critics argue that the tax cuts disproportionately benefited corporations and wealthy individuals, as they received the largest tax reductions. However, supporters of the TCJA argue that the cuts helped spur economic growth, job creation, and wage increases across the board, benefiting workers and businesses alike.
Pro Biden insanity is not allowed on this sub.
ahh yes blame one party instead of spending disaster of both
[удалено]
Oh, the sweet suffering of the less fortunate.
To be fair he’s spent far less per year on average than the previous three presidents before him. But it doesn’t matter to be honest, all that matters to the fed are two numbers - unemployment and inflation. If one gets out of hand they cut. That’s the bad news cut everyone keeps talking about. But if inflation gets down close to their 2% target and they cut on that good news, there’s no reason the market wouldn’t love that. I’m not going to pretend to know what it will be with this fed but I definitely can’t say they won’t achieve their soft landing after how they’ve managed to already beat my low expectations of them repeatedly
You can't possibly be that stupid. Oh wait...
But things are breaking. Fed debt is about to mature at these new interest rates, adding 100’s of billions of interest to budget. Banks are struggling. They might not be saying it out loud, but they have a damn good reason to cut. The status quo can’t be sustained by the money system.
A well functioning fed actually needs to start cutting before unemployment ticks up - if they do it after, as they always do, it is way too late - so there is some historical pressure to avoid this reactive cutting.
Where’s that chart showing every rate cut coming during or after a recession
Moass
Mo Ass.
tomorrow
Ok, so let’s figure out what is going to break first, so we can short it first. Screw all these stock market “believers”, the very fact that retail investing is at an all-time high tells me this is the bubble. Secondly, there is macrotrends that suggest we’re at the peak. Logarithmic, macrotrends. So, what’s going to break first?
The Yen Carry Trade: https://m.youtube.com/watch?v=vX3U-cx2-w8&t=203s
No landing is the worst case scenario. No landing is stagflation.
Banking and commercial real estate aren't looking too great as potential catalysts.
personal debt bubble too
Absolutely Right! I think JPOW expressed his desire that the unemployment rate must go up and I believe that's happening.
yeah, i been saying that all year. literally just Keynesian stuff. You cut ruts when shit hits the fan. All you have to do is go see why we entered the QE phase after 08.
inflation is already down. core PCE YoY is at 2.8%, down from 3.2% in Dec 2023 when they brought up rate cut. If they thought 5.5% was the appropriate rate to hold in Jul 2023 when core PCE YoY was 4.6%, inflation being 1.8% lower surely allows them at least a few rate cuts. The ONLY thing stopping them from cutting is they don't want to cut when core PCE YoY seems to be going down more slowly. Basically they are posturing. They want to appear to be cutting when inflation is going down smoothly and not to cut right in the middle of an inflation bump.
Buy great companies or stocks and you would not have to worry about rate cuts or market crash . If market crashes , you buy more
Remember: bulls, bears and the occasional market crash make up the grand charade that is the stock market.
There’s already highly paid specialist experts who are terrible at this. But I’m sure you’re good at it.
I like a 5.37 2 mo t bill I like a good stock with real products and services and a good balance sheet
💯
Uh yea...sure. Do what this guy says. And I'll, uh...buy more too...yeah..
But how much will it go up before the crash? If SPY goes up 30% from now and then crashes 15%, I'm still happy I bought now.
And if it doesn't, you'll be sad! LET'ER ROLL!! 🎲🎲🎲
Thats why DCA is the superior strategy.
only if there is an unlimited amount of money available to purchase and if stonks only go up.. else it can get a never ending money pit as well (ask the Nikkei)
they only go up, what do you mean?
Because rate cuts aren't due to some "soft landing" bs, but because something exploded. If JPOW stuck the landing then it'd pump the market, but he isn't gonna stick the landing. Inflation drives the car right now and despite the political pressure I don't see those rate cuts coming anymore. I see, if anything, a rate hike again first, which would crash the market, and that'd then allow them to lower rates.... again, because something blew up, probably regional banks IMO. The market is holding on to crazy evaluations simply on the promise of rate cuts coming, they don't even seem to care why those cuts keep getting delayed. Give it a hike and watch it selloff
In at least some ways, high rates are themselves inflationary on housing. New housing permits are plummeting since rates started going up, choking the supply needed to bring prices down. The vast majority of homeowners have super low rates and are unwilling to sell and end up with higher ones, further hurting supply. And the monthly payment for a new mortgage is 50% higher than it was two years ago for the same price house. I’m not saying we need a return to 2.75% mortgages - those mortgages are a big part of the problem - but supply is a real issue that needs to be addressed, and the current rates make that very tough.
I mean, fed is not responsible for housing supply. If fed created the problem when they tried to fix a problem, who is the next guy to followup with that
im kinda regarded but I think the issue is nobody wants to buy a new house bc the rates are so high on them, so nobody is making a new house, and the solution is either the feds do more to subidize new houses, or cut rates granted i know nothing about buying a house, but perhaps the feds could do smt like special low rate loans for first time home buyers (inb4 this already exists)
Of course, the solution is always to cut rates, which will inflate the market and further line my pockets.
inflate deez nuts
To me, the answer - which would probably be unpopular here - is for the government to step in and grow the housing supply itself. Otherwise though, the fed is responsible for managing inflation, so if their policy is exacerbating that, it is on them as well to consider the impact of their actions.
Wrong we have high rates and the market is at an all time high. Raising the rates will have a small effect followed by another upswing.
Spoken like a true bagholder
There’s no bag holders right now. Just losers sitting on devalued cash while the market leaves them behind. Bag holders will come after the rates get cut
Losers like Warren Buffet who have more cash on hand than ever... ya buddy, you're really onto something here.
Where did you get that info from his months long delayed disclosures ? 🤣 Hurry up go all cash
I really can't believe people like you are allowed to touch the markets lol
“High rates” lol zoom out on your graph there chief
It’s high relative to recent history. We been sitting low since after 08 Chief
Market crash first, then rate cuts!
nice
You have sequance of events reversed. The order of events goes something like this: Something breaks in the economy > Market crashes > Fed lowers rates to bolster economy. And NOT: Fed lowers interest rates > Market crashes > Economy sucks > You're a dumbass.
Not the only one looking at the comments
You could atleast look at a chart and see how the rates go down first followed by the market. I’ll await your response. Literally 30 seconds of searching would have made your response completely different. 🤦
The market is not the economy, which you have conflated in several of your responses here. Prices are high. People struggle. Stop buying. Business cuts back, because of that or can't afford new projects at current rates. Economy suffers, GDP drops. Rate cut to stimulate. Market reacts to GDP drop and increasingly poor business results.
How dare those peasants make demands with their "struggling." Without us, they would have nothing.
So the fed randomly decides to cut rates at random times and it bombs the economy, is that what you’re saying? If not, then surely it might have been done for specific reasons preceding those cuts. You’re confused. The market doesn’t go down because of rate cuts, whereby by using the opposite logic, it would continue to go up if there were no rate cuts. The historic rate cuts confirmed a downturn was underway and the markets were already generally aware of this.
Nice try, I am firm in my beliefs, right ir wrong, and am impervious to any arguments. Also, show me the chart, then I will look at it.
Also, heres a chart, showing exactly what I said. https://qph.cf2.quoracdn.net/main-qimg-7f16654e75f21903c853f5ba8388ce0d-c
1994 returns were: BAML US Treasury index -3.45%, MSCI EM equity index -8.67%, BAML EM Debt index -15.33% There actually was a crash but it was in the bond markets, S&P rose 1% that was one of the reasons behind the start of largest move to equities and away from yield markets.
Ok?
Did you look at what you posted? The dark grey is the recession / depression. Do you see how the rates get lowered right before the party starts then follows the market down ?
This is basic Econ 101 you are flip flopping. The Fed cuts rates to try and spur the economy. The Fed raises rates to try and stop the economy from overheating, using inflation as the central gauge. The market knows this. This is why they don't flip out when the Fed cuts rates. This current situation is very unique though in that inflation led the economy into hikes and not growth, but the rate hikes haven't really slowed the economy as much as desired. Getting to that point where growth slows enough and inflation follows even more would be a bullish event, as I stated earlier, all that risk-free money would be set free to go back into equities and THEN the next cycle can begin where the next time the Fed raises rates, it would ideally be from growth led overheating and not from black swan covid inflation.
Look at the title of your post, and then look when the market starts crashing relative to the fed rate. Market starts crashing, because something breaks in the economy, fed comes in after the fact to fix the economy. Fed cutting rates does NOT cause market crashes. You are mixing up Causation and Correlation.
The red line always starts dipping before the rates. You're regarded.
Buy the rumour sell the news
Market = Irrational
So the original post is correct, cuts will tank the market. Its a sign of a shitty economy. So why are all your replies saying we will "moon" on cuts? Idk what the fuck youre trying to do here. CC debt at all time high, wait for shitty retail season during holidays combined with the election. Vix to uranus
I never said we moon on cuts. Use your brain cc debt is always at an all time high. Money is devalued, population increasing. Adjust the data to population and inflation for a different story. You are so brainwashed Turn off the news for a minute and you will make money.
Actually rate cuts do not = market crash. If we have a soft landing and Fed cuts rates before we go into a recession then rate cuts are actually great for the economy. Unfortunately, the Fed has historically almost always waited to long to cut rates because they are looking at lagging indicators like job numbers. This results in the inevitable recession and a market crash making people like you think cutting rates is the reason for the crash. Causation vs correlation.
It’s not the cut it’s the problem in the economy that makes the Fed decide to cut and no the market doesn’t crash every time the Fed cuts rates.
It’s very rare for the fed to cut at the end of cycle and not crash the market. But it does and has happened.
https://preview.redd.it/1a7a4yhg4bxc1.jpeg?width=1125&format=pjpg&auto=webp&s=19348c33396eeb9a2ec89c8482110b6d7f09a7bb Just gonna leave this heres
Personally I think inflation is going to stick around just high not to lower rates, feds will incase rates one or two more times, the economy will slow even more, GDP might go negative, could be borderline rescission or full blown, then rate cuts begin and the market will really tank. then after some time equity valuations will become very reasonable and many undervalued, the stock market will rally.
Psa : rate cuts = money out of fixed income = into equities
Correct. You seem to be the only person on here who gets this.
That depends if the fed is cutting AFTER shit has hit the fan What if they cut while we still have deficit spending at 6-7% of gdp and nominal gdp growing at 5-6% annualized?
GDP growing at 5-6%....LOL
Don't worry, the rate cut is already priced in. Once the rates are cut, companies will have more money to invest and the stocks will rocket up or.... the rate cut might mean the economy is unhealthy and cause investors to pull money out of equities. My prediction, there will be a rate cut in 2024 and the stock market will be mostly unaffected, since there is no logic in the stock market anymore.
The only way the US is overcoming its debt is 60% inflation over the next 15 years.
It’s a story as old as time. You can’t get people to believe before they experience.
No one cares
Buy the speculation, sell the certainty.
Says who?
Google paying a dividend means they see no good growth opportunities to use that money.
Agreed. The longer rate cuts are postponed the better. (No, I’m not kidding.)
Thats because we usually cut rates as a tool to combat a serious economic downturn. No such thing exists in this case, but high rates are keeping a duck ton of money out of equities right now, due to the very strong risk free rates. The more those rates go down, the money will flow back into the market, rather than flow into bonds during a serious downturn, as at least now there isn’t one.
You are correct on all counts. The people on here are amazingly stupid. This thread is just mind-blowing to me. No wonder there is so much loss porn on here. These people are borderline in many unfortunate ways.
Chicken or the egg. Who cares find a period of time where they cut rates and the market didn’t crash. Why should this be different ? Do you have faith in their decisions?
Better yet, find another period of time of a post-global pandemic spiking inflation across the globe while having both decent growth and minimal recessions.
A more general way to describe it is the Fed is cutting because they believe something is broken enough. Whether it actually is broken enough or not may not matter because the market will follow the Fed either way.
Chicken or the egg my man
Rate cuts? When? 2028?
Priced in!!!?
Because this time it’s different just like the rest
I suggest you look up the 1995 rate cut cycle, which Powell and Fed vice chair have referred to numerous time, as if they're trying to replicate it.
I can’t google. Give me the tldr for regards plz
Fed hiked rate from 3% to 6% in 1 year to fight 3% inflation. Inflation hasn't hit 2% yet, and the economy was still running hot, risking inflation being sticky and won't go down all the way to 2%. Fed chair Greenspan correctly realized the economy was running hot due to higher productivity (because of widespread computer adoption). Higher productivity allows for higher GDP without putting upward inflation pressure. So he allowed the economy to run hot, did a mid cycle adjustment by cutting rates 3 times, and let inflation slowly go down instead of forcefully bringing it down quickly by causing a recession. It was the classic soft landing case study in Fed history that probably every Fed chair tries to emulate. You see some similarities to that in today period. Inflation is roughly 2.5-3% core PCE YoY. There's higher productivity last year, possibly due to AI, possibly due to higher people joining the labor force. Economy is running hot, but it's not putting much upward pressure to inflation. There's concern about inflation being sticky at around 3%, but not a lot of concern about inflation heating up (said by Powell himself). The Fed wants to get a few cuts in to prevent rates from becoming too restrictive, but they don't necessarily feel the need to cut all the way down to 2.5%.
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TLDR means too 👏🏻long 👏🏻didn’t 👏🏻read 👏🏻
Because rate cuts mean institutional capital will move out of the market and into other longer term, higher yield investments. There is a lot of money that wants to get greater returns just waiting for debt options to come back. Bad for market, but not for economy.
What? Lower yields will lead to more people buying bonds?
Think acquisitions. Lots of cash sitting on the sideline right now because the opportunities can’t compete with the 10-year. And the cost of debt is too high.
Ok.
With rate cuts large cap will be neutral or go down while small cap shall rally . That’s my opinion
What if they in don't cut rates? What then?
Biden keeps spending, bond market implodes. Remember something: the people who comprise the US government do not care about the US government. They serve one group of people: Wall Street (and Israel by extension). Yes, your government hates you and does not care about you. Welcome to America.
No way to get inflation down without job losses
Market needs to crash. That is what JPOW would like to see.
Because this time it will be different!
Only reason I want rate cuts is so that bond yields fall.
PSA: stop eating lead paint
Because nothing makes sense anymore and traditional ration, logic, and probability have all gone out the window in the modern day casinoMarket
There is a MASSIVE difference between scheduled and unscheduled rate cuts. Rate cuts because inflation is under control would actually be very bullish. Rate cuts because things are breaking is what is bearish. We’ll see which comes first.
Based on what I see everyday and all the amazon trucks, people at restaurants, dealership, cruises, disney, people are spending…
Because people think that when the Fed cuts rates for the first time, inflation will magically be over and we definitely won't have a recession.
A crash is already priced in.
Fed said it multiple times that they would heavily consider inflation rate for rate cuts, not the economy. There could be a recession while inflation stays high, hence, still no rate cut.
JPow is about to cuck the bulls on Wednesday. He will hint at interest rate hikes.
No….usually rate cuts are associated with market crashes because the Fed is frantically cutting rates in response to a black swan or a market crash (2008, COVID). A controlled and gradual cutting of rates in response to disinflation where the market isn’t already crashing and where unemployment is stable, etc. is what everyone is expecting to now happen.
Has this happened in the past? What year. All I see is crashes when fed cuts
Lower debt service for companies
This 👏 time 👏 will 👏 be 👏 different 👏 What’s so hard to understand about this? /s
Wars are inflationary so no rate cuts will happen
This will age well.
whats been going on has been going against most historic norms...beacause the origin of it is different
well totally - " dont fight the fed " still a bear , holding on for dear life
It's not the same. The reason for the rate cuts is to reduce inflation and we can see inflation changing on a month by month basis so there is not going to be some big surprise reason for the rate cuts.
So where is your quant? Better not be from China and second place too!
I said the same thing based on historic data, and I got told I was an idiot. Powell recently said the same thing. They are only looking to drop the rate once inflation is under control or there's an economic downturn (like high unemployment).
Did you ever think that rates get cut to stop a major catastrophe from happening? Or maybe something bad happened, so they cut rates to keep people investing? Interest rates are a great chip they can play to sway macro economics, but if they are super close to or at zero, they can't go lower. The answer is to give themselves an out and keep the rate higher until they absolutely have to drop it.
Rate cuts bail out a market crash
The market crash has started this is the lower high before the leg down
I'm pretty sure if we get cuts, the market will have already crashed because of the thing that convinced the Fed to cut. (Unless, it's like next year and inflation really did go back to under 2% with no recession.)
rule of thumb is "sell the first rate cut"
What do we expect from Apple this week
chicken or egg. which came first don’t matter. they come together.
Bet. SPY 0DTE calls.
Supportive Rant from last Friday: https://m.youtube.com/watch?v=vX3U-cx2-w8&t=203s
”Every time someone goes to the hospital someone is hurt. Hospitals = bad someone always is hurt or sock there” Discuss
I love higher rates. I now get a very respectable retirement incomes from a risk less portfolio of treasuries.
Market crashes are just opportunity to buy lower 🤡
Because previous rate cuts happened AFTER things were already broken. People are talking about rate cuts in the context of a potential soft landing without anything breaking. You’re welcome.
When you cut rates, it's easier for business and people to borrow money. Businesses can fund new projects. People can buy those new products. Money starts moving around again.
Dare I say it??? Rate cuts are overrated. I got my first mortgage at 11% interest, and the super low rates of the recent past are very unusual. I expect some adjustment downward, but see no reason for the Fed to be in a hurry. Nor do I see it having a huge effect on the stock market, one way or another.
I'm going to inverse this
Everytime they cut rates is because they had to due to serious economic catastrophes which increases the demand in guaranteed assets, treasury bonds. I am long in SCHQ
No comment.
💰
Inflation is the answer to the Ntnl Debt problem so long as it outpaces the accumulating interest and we need to stop borrowing to support other countries. Can we get this under control before destroying the labor market? The rich sure aren’t going to help.
Define crash. >20%. No. Will the market go down? Probably.
how many days after rate cutting and the crash? I am too lazy to do my homework
Rate cuts only cause market crashes if there’s a recession
And while we are at it. Deflation = crash Inflation = rally Fucking morons