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Where’s The Fire Now?
I'm a broken record: The Fed should keep rates unchanged at the November policy meeting. But I'm also a realist: They probably won't. They'll probably cut. Again.
To be clear, a cut next week isn't, strictly speaking, "crazy." It's not the worst idea I've ever heard, but that's a pretty low bar, particularly in the context of an institution famous for bad ideas.
Thursday's update on a crucial gauge of employment costs came up benign, as did the latest JOLTS release, so there's no wage-price sp
I’m with you, Walt. I’m reasonably confident that Powell knows what he’s doing. What’s the hurry?
I don’t think it will hurt to throw a little cold water, in the form of a non-action, on the economy. I think it’s a better idea to let the bets ride as they stand. I’d actually prefer to see the Fed act that way. After the November meeting there’s another before Christmas. I’d like to see the committee sit on the rate right now and exercise their power just prior to the new year. I like how that sets up 2025.
I think the “fire” is election day. Call it what you want–jawboning, moral suasion, whatever–but the one thing they can do to put a thumb on the scale of election outcomes is to talk up markets, and that means rate cuts. One Wednesday, they’re free to do whatever they want, but until Tuesday, they don’t want to do anything to make it seem like there’s anything wrong with “Joe Biden’s economy.”
Even if I’m right, they could still cut Wednesday–probably will–for credibility reasons, but i won’t be completely shocked if they turn around and announce a dovish hold. It’s not like Powell or the Fed as currently constituted to wrong-foot markets like that though, so it seems unlikely.
But yeah, that’s the answer to the question. Where’s the fire? It’s at 1600 Pennsylvania Ave.
I believe it was famed producer Bruce Dickinson (yes, the Bruce Dickinson) who said, “I could have used a little more decimal places… and C? Really explore the space this time… You’re gonna want those decimal places.”
On paper, not sure the EU should have cut either. But I seriously believe that the lower portion of these two K-shaped economies are in, or getting close to, “bad shape”.