Posted on 08/22/2016 3:35:02 AM PDT by expat_panama
Edited on 08/22/2016 7:02:02 AM PDT by Sidebar Moderator. [history]
Does the Federal Reserve play politics? You could just as well ask if the Pope is Catholic.
Investors should be wondering about the Fed
(Excerpt) Read more at marketwatch.com ...
When rates on 30 year fixed rate mortgages go back above 6 percent, the housing market will be crushed.
If Trump.is.elected they will raise rates and gleefully blame Trump for the economic downturn.
But what will happen if Hillary is elected? They cannot delay an increase forever. How will they explain an economic collapse under Hillary? Especially if Obamacare is imploding at the same time?
If it looks like Trump is winning they will raise rates significantly on November 2nd.
While an increase in mortgage rates certainly wouldn’t help matters, in my area (northeastern NJ/NYC metro) mortgage rates of 1% wouldn’t help sell homes nobody wants. The property tax burdens, coupled with a horrible job market, prevent any Americans (except public employees) from gambling on buying a home. Childless workers following jobs around like Okies in “The Grapes of Wrath” have no use for 30 year commitments to a bank and municipality.
Precious metals however are giving up their 'safe haven' status as silver drops to $19.03 --off it's cozy base it was trying to establish. Futures for all metals this morning are a bearish -0.97%.
No econ reports today, later this week we get GDP and next week's the Fed favorite inflation gage, the PCE.
Over coffee:
We can expect, with 100% certainty, that November 7 through January 19 is going to be disastrous for We the People, when Trump wins. Look at some of the probable things we’ll get hit with:
* If Social Security increases, increased Medicare will wipe it out. Seniors have less money.
* Gun control edicts supported by Congress.
* Environmental regulations will cripple the economy.
* Manufactured violence will explode; but only in warmer areas.
* 24/7 blame Trump in all propaganda outlets.
* All out effort to bribe and/or threaten electors to vote against Trump.
* Articles of Impeachment introduced.
So then, used to be, but not anymore?
We can expect many things in the Lame Duck time period. Trump wins..TPP, immigration legislation passed and Supreme Court nominee approved. Clinton wins...Same scenario. Dems win one or both houses then more is approved between Jan 3 and Jan 20. I do not think our masters are done dealing with us. Trump wins with Repubs or Dems in control, they shut him down for 2 years and then say you are finished. I have a difficult time seeing any positive scenario for our American future.
They’re not going to raise rates ever.
They can’t afford to sell any of their bond assets, because those assets are junk.
When the Bond market finally implodes, rates will spike up then. But it won’t be the Fed doing it.
That's what they did with Reagan. However, raising rates helped the economy after the sharp but very short recession. It may do so again although this time there is less overt inflation and more distortion from the prior low rates that will have to be rectified sooner or later.
I agree. Rates should have been raised a decade or more ago. Instead we have so much distortion (speculation instead of investment) the economy cannot recover and rates cannot be raised without some major pain. If we had leaders we would raise then, but we do not.
if Trump wins I imagine gas prices will shoot to $12 a gallon and the press will flip and start talking about how bad the economy is every 3-4 minutes. It will be 24 hour doom and gloom.
“Trump wins..TPP, immigration legislation passed and Supreme Court nominee approved.”
If Clinton wins, they will wait and try to pass all the above and more after her coronation.
There is no need to hike before the election based on actual evidence. December at the earliest.
If the idea that rate hikes are for controlling inflation, then what we do is we look at inflation--
--and when we see that the cpi is falling (deflation) and the PCE is about one %, we say we don't need rate hikes. For now. fwiw, July's PCE comes out in a couple weeks...
That’s certainly a huge part of their formula (PCE is the FOMC’s preferred index) but also wage growth is the other key factor.
Ever notice how freepers just looove to say we got 'runawayhyperinflation' and when I ask if their incomes are soaring they say say wages have nothing to do w/ inflation. Rush was saying that too --"...we got horrible inflation and stagnant wages..." and that's when I switch back over to Dennis Prager.
Right. It’s the lack of strong wage growth that is the key indicator as to why there is zero reason to tighten.
If you remember all last year I said there wasn’t reason to tighten but the Fed would in December just to show they would when necessary. Nothing has changed since then. Ditto for 16.
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