Posted on 12/13/2023 2:34:52 PM PST by davikkm
In a surprising move, the Federal Reserve is hinting at multiple rate cuts in 2024, sparking questions about the stability of the financial system. This decision has historical echoes, as every major rate cut since the 1970s has been followed by a substantial 30% drawdown in the S&P 500.
For the first time in recent history, Chair Powell’s alignment with market expectations signals a potential departure from the usual cautious stance. The market has responded positively, with the S&P 500 on track for its 9th green day out of the last 10, reflecting investor confidence in the Federal Reserve’s promises.
(Excerpt) Read more at citizenwatchreport.com ...
The rate cuts are in anticipation of a drawdown, it doesn’t cause it.
Powell is trying to lead the drop that the rate increases helped induce.
Whether his timing is right remains to be seen.
B of A said the s & p was going up next year. Is B of A full of bs?
Election time…gas prices falling and so is inflation…short memories alone with propaganda and voila, more Marxism.
Hard to say. If the rate cuts overstimulate, then yeah. BoA is right. But it won’t be 30 up or 30 down. It didn’t go that far in 2022 when they started bumping up. Bit more enveloped...
The wild card is Biden and his BlackRock buddies. God knows what kind of nutcase crap they might pull.
-PJ
So will my house sell?
Inflation hasn’t stopped. Normally rate cuts are meant to slow inflation. But in this case, inflation is killing the consumer. Spiking interest rates have killed real estate. It’s an election year.
So now we cut rates to stimulate an economy that is already massively inflationary. And the inflation is not due to a hot economy, it’s due to massive government money being pumped into the economy. But to mask it, we are going to lower rates and pump MORE money into the economy.... making more inflation, but they hope AFTER the election.
They have painted themselves into a monetary corner. If they don’t lower rates, the economy grinds down even slower and turns into a depression. If they do lower rates, they add more inflation fuel and we head onward to the coming depression.
Idiots.
And what was B of A saying in 2006 or so?
B of A is a joke. I was tempted to apply for an Amazon card that they sponsored (it offered a cash bonus upon acceptance) and they actually declined it even though I have a FICO score of 820.
Yes, some of the posturing by the Fed will be to help re-elect incumbent politicians.
However, there is way too much in play at the moment to forecast what will happen or what the Fed can control.
Argentina wants to scrap their currency in favor of the dollar. That will drain a lot of dollars out of the US.
We have wars potentially all over the world, Ukraine, Israel, China-Tiwain, Iran-everyone, etc. Lots of folks will want to take there savings to a “safe haven” and the US looks safer than most.
Finally, you have the OPEC countries agreeing to cut production in the first quarter of 2024. That should cause oil and fuel prices to increase significantly.
You have a huge part of the federal debt needing to be refinanced next year and if they don't cut interest rates it will be harder to pay that debt.
A lot is in play in competing ways.
There are a few who are predicting deflation next year - because they think we are heading for an outright depression.
Election year. Dem incumbent.
Frankly, I feel sorry for all the FReepers who talk about getting in/out of stocks because of this or that piece of news, legislation, etc.
Your best chance in the stock market seems to be buy and hold. Dollar cost averaging. With a couple of exceptions:
* You are invested in Berkshire Hathaway (the thing Warren Buffet and 2 buddies founded in the 1950s).
* You have contemporaneous knowledge of Nancy Pelosi’s trades.
I’m tired of the word MULTIPLE. Whatever happened to numerous, several, or many ?
B of A said the s & p was going up next year. Is B of A full of bs?
*****************
I saw that awhile back as well. On the other side, the bearish side is JP Morgan.
Flip a coin.....heads is a bull.....tails is a bear.
“Historically, every major rate cut led to a 30% S&P 500 drawdown.”
Followed by a Bull market. This time we are still at historically low rates so we may not need “major” cuts.
Conservatives hoping for a depression for political reasons?
I don’t think anyone is hoping for a depression nor should that be necessary to get Biden out of there. Mostly it’s the doom & gloomers on YouTube predicting a depression.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.