Why did the Fed resist lowering int rates
There may be several reasons
The Fed may be afraid of a slow down in american economic activiy. If so they want to keep their powder dry for use later if needed. The amount the Fed can do to halt or slow down a recession is just plain wishfull thinking, no matter how much Trump wants to talk up a storm about high int rates. Trump is using the Fed as his personal punching bag and hoping to divert attention away from the real issues, some of which he caused himself
Is a recession likely to happen soon
IMHO
I think the answer is a recession will hit us, possibly with a yr. or less.
The latest jobs report showed only 75,000 new jobs created, much lower than population growth and no mention of illegals who are not counted as being any where as they are invisible, so ?? is that number cause for concern??. Not in and of itself but combined with other events, yes it is
College and university grads report a big problem finding a job. Did they study a course of action so as to find a job or did they just fritter away their time on useless study programs
Our own forum has reported the RR indicator on a lower number, but this happens so more time is needed to know the true direction
Surprise: Just a short time ago, the headlines were all about a shortage of truck drivers in spite of high wages. Today trucing companies report a drastic slow down in loads available to be moved
Wall St. has started to sell CDO's and other such instruments of high risk. Could anything go wrong. You bet it could with a high certainty of loss of capital from investors
Housing has slowed down resulting in less demand for new lumber from the saw mills and the ripple effect
The Dow hits new highs but what about the others
Raw material of all kinds have reduced demandm indicating a lower demand for consumer goods
The ag production industry, of row crops, is in trouble, possibly leading to higher food pricces of some foods
The on going trade battle and tarriff increased cost will work it's way into the consumer cost to purchase such goods
Add all this up and the future is pointed very strongly to a recession
How bad could it get
IMHO this could be one of the worst in history since the west settled in NA
Like what coud go wrong???
Just about everything, as I mentioned just a small example of looming disaster
Int rates, even if they go negative, wll be like spitting in a tornado and trying to put out the fire.
Thanks Wayne!
"Federal Reserve policy makers are discovering they likely need to shift into an even lower gear if they are to speed up the U.S. economy.
Chairman Jerome Powell and colleagues last week estimated that the so-called neutral interest rate -- the level which neither stimulates nor restricts growth -- now sits around 2.5%, down from 2.75% in March and as high as 4% in 2014.
That means the Fed’s current benchmark of 2.25%-2.5% is unlikely to provide the power policy makers once assumed it would, leaving eight of them anticipating they will have to reduce rates this year amid growing risks to the economic outlook."
Updated Wed, Jun 26 2019 12:04 PM EDT
https://www.cnbc.com/2019/06/26/gold-market-fed-rate-cut-bets-us-china-trade-war-in-focus.html
the US is going into the worst recession since 2009 and it is going to start by September and last until January 2021.
The stock market will make a new low for the year before this year is up.
The real estate market peaked in early 2019 and will not bottom until 2031.
While there is a chance that the FED will lower rates at some point, it is not a given and
rates could just stay right where they are at, until 2021 when the fed then raises rates.
Wow Richard, those are some extreme predictions.
You do realize that this mentality is why you've been constantly buying WOOM call options in crude oil the last decade and it hasn't gone so well as they all expire worthless.
However, I do respect your understanding of numerous markets and you make some great observations/do some skillful analysis which often leads to good very short term predictions.
I have no skill at long term forecasting but a forecast of the real estate market that targets the year 2031 for a bottom is a bit much..............sounds like the climate crisis which will destroy the planet before then(-:
Maybe the real estate market will be collapsing because the worlds oceans will rise by 30 feet and destroy trillions in property along the coasts(-:
Along with the category 6 hurricanes( a category higher than what exists today).
Now here is the funny part of the case this article makes for climate change from global warming to be causing cat. 6 hurricanes.
“A ‘black swan’ hurricane – a storm so extreme and wholly unprecedented that no one could have expected it – hit the Lesser Antilles Islands in October 1780,” Masters wrote to open the post. “Deservedly called The Great Hurricane of 1780, no Atlantic hurricane in history has matched its death toll of 22,000. So intense were the winds of the Great Hurricane that it peeled the bark off of trees – something only EF5 tornadoes with winds in excess of 200mph have been known to do.”
Why are they not appreciating the fact that the greatest hurricane we know of in history..........occurred during the "Little Ice Age"
Little Ice Age:
https://en.wikipedia.org/wiki/Little_Ice_Age
Great Hurricane of 1780:
https://en.wikipedia.org/wiki/Great_Hurricane_of_1780
The neat thing about economics is that, with patience, almost any prediction will eventually come true.
base metals have not yet broke down. they have come close, but not yet.
i'm watcing freeport mac... FCX.,... it bounced off the 10 area, but it should break down if copper is going to plunge lower.
dollar looks like it wants to break down, but copper should go up, if the buck is going to break down.
i think that the buck and copper will not break down at the same time.