Loading ...Short Term Bounce Likely
Given yesterday’s sharp selloff and today having both the monthly jobs report and FED Chair Powell speaking, I would expect to see a bounce today, especially being a Friday. Weak pre- market, but the job number could start the bounce or accelerate it until Powell around 10:30. The sharply lower bond market interest rates, at least short and mid term, once again leaves Powell and the FED sharply BEHIND the curve. They need to cut to get Fed Funds more in line with market rates. Not talking about long term rates, but short and intermediate need to come down by 1-1.5% and it won’t cause inflation. While there still may be plenty in the pipeline from all the “magic money computers” from Biden, DOGE is turning those off and the increase in money creation will be dropping, at least in the short term. So not a time to go long except special situations but a one or two day bounce is likely today and or early next week.
Correction on time of Powell’s speech. 11:30. Perfect time to announce an Emergency rate cut of 100 basis points. Could happen if market accelerates on downside especially if the jobs number is weak. If S&P gets down 7% (over 400+ pts) would trigger the first level circuit breaker where trading would halt for 15 minutes. He probably won’t but should cut based on the sharp drop in interest rates and oil signaling the economic collapse that is coming. He will be criticied by some as “saving the stock market” but it is only going to be a short term bounce if he does cut. The economic landscape warrants lower rates. Not back anywhere near zero, just to 3-3.5. Corrected the percentage earlier had it at 4% was thinking of the approx. 400 points.
Monster Jobs Report Apparently
“Not talking about long term rates, but short and intermediate need to come down by 1-1.5% and it won’t cause inflation. ”
I call BS on “won’t cause inflation”
Any rate cuts that spur borrowing, equate to inflation BY DEFINITION.
New lending = increased money supply.
Its just a question of how fast and where prices increase.
Lower short term rates will accomodate refinacing much more than new borrowing. Who is going to get major new loans because FED Funds comes down 1-1.5%? If any borrowing is done the 10-20 year rates have already dropped because the bond market reflects the slowing economy and those are the rates any new borrowing is based on. So the bond market just caused inflation. Ridiculous argument.
Wouldn’t it be sweet if this tarriffs-induced crash forces the reveal of who the Federal Reserve’s true masters are.
Is the Fed going to respond to save US markets (dual mandate of full employment and market stability HAH!) OR are they going to continue with their mission set forth in 1913 by people who don’t give a shit about Americans?