I'm no economist so lets make that clear off-rip here, but lets think about this. Powell doesn't want to cut rates because he fears that will further fuel the impending inflation we all know is coming soon due to the tariff war with China. OK, but here's the thing. There exists a substantial psychological factor when it comes stimulating the economy with lower rates. Consumer borrowing costs go down, and basically they feel good and spend more. Companies feel good and they hire more people, which drives up labor rates. Etc, etc. But perhaps this time is different. Has anyone thought about that? People are scared. This tariff thing has everyone spooked. For good reason. Look at the UofM Consumer Sentiment numbers last week. Horrible. So one must ask... will rate cuts this time around suddenly inject a "happy days are here again" mentality into the economy? No friggin way imo. Just because borrowing costs are lower, doesn't mean folks are going to run out and buy junk on AMZN that is twice as much as it was a month ago. In fact, I know they won't. They'll hold off. Same thing with foreign made cars. A $45K BMW is now $60K? "I'll wait." What might change though, is home sales. Especially existing home sales. If the year 30 year fixed drops nicely in solidarity. New home sales might jump too, but with a degree of austerity when it comes to furnishing them. Yeah I know, the whole Canada lumber thing, but for the most part, you can build a new house with damn near 100% of the materials being sourced from within our borders. So.. just a thought. One things for sure though... calling Powell a "major loser" or whatever Trump said... probably not the best way to get a man of his pedigree to reconsider things. Pretty sure about that one too.
Then I take it you agree with me on this point also: Lets call a spade a spade here B1. Dumbest tweet he ever made.
Rate cuts would destroy this economy and market. First a round of fed cuts would put the market into more uncertainty ....the last thing these markets need are rate cuts....once inflation cranks up again you'll see the fed in worry mode thinking once again it's only transitory.....