From Black Monday To The Dot-Com Bust To The GFC: A Visual History Of The S&P After Rate Cuts
Read more from The Macro Tourist
The market is definitely torn about whether last week the Federal Reserve signaled a pause in their rate-tightening campaign. You know where I stand (they did), so there is little to be gained by my shouting into the wind trying to convince anyone.
Yet one of my more astute readers sent a note to be careful what I wish for. Now, he knows we are a long way from the Fed actually cutting rates. In fact, I suspect we both think the Federal Reserve will raise rat
it seems like the fed reacting to one off events, like lat-am or ltcm, or black monday can be effective. but when theyve kept them too low for too long, then raised…then cut b/c the econ seemed weak, there was a serious mkt decline.
also given the zero bound, the fed has already caused financial conditions to tighten as much as a full rate-rise cycle in the past. so today we have: too low for too long; full tightening cycle already occurred, and now looking to more tightening…..unless we can sell the Trade War as a one off event that the Fed can help fight.
lowering anytime in 2019, will be interpreted as ‘oops’ and there is weaker data to come. leverage in the system is extremely high….HF traders and massive trend followers are going to cause larger, swifter declines than in the past….either get ready to ride or cover your eyes and pay homage to Buy and Hold for the next couple few years.