"No rate cut for you!” (Fed Chairman Powell's “Soup Nazi” episode)

Photo above - Do you need more proof that AI images are plagiarized garbage? Mudjourney created this one in response to the prompt "Fed Funds Nazi" . . .

The stock market had another flash crash yesterday. At first glance I thought it might be due to something important. Like Iran on the verge of declaring war on Israel. The CIA DID warn that an attack was imminent. Israel promptly turned off their GPS nationwide. (This is really true).

But no – the market is apparently shrugging off a nuclear armed dictatorship threatening to bomb a nuclear armed democracy. Yesterday's market move was because (ta-da) . . . Fed Chairman Powell gave another speech. (see link below).

Sorry folks – no inerest rate cut anytime soon. Does this mean inflation is NOT licked after all? Or that tripling interest rates isn't the right Hogworts' spell to make housing, food, and energy affordable again?

Well, people would only have been expecting a rate cut if they took Powell seriously last time. Like the speech he gave on November 1st, 2023. The DJIA was around 32,000 that day. He reassured everyone that rate cuts were coming. He did it again on February 4th this year, during a surprise TV appearance on 60 minutes. The Dow had dropped almost 2% the day before. Powell's TV cameo reassured the markets. The Dow soared afterwards. It's now 8,000 POINTS higher than the day he made his November 2023 speech.

Keep in mind, this is about interest rates. Not corporate earnings. Or nuclear war. Or the national debt, homelessness, or Fentanyl overdoses. The market is transfixed on Jerome Powell. All he had to do is say "nyet" to send the Dow in the wrong direction.

I expect the indexes will rise a bit over the next week or so, so please don't post obscene replies in this thread reminding me that the market always goes up and down. It certainly does. But should the number one factor be speeches by some government bureaucrat? This isn't frickin' China, for Pete's sake.

I stand by my earlier snarks that the Fed Funds rate is being managed for 2024 election benefits. The market went up after Powell's 60 minutes cameo. So did Biden's polling numbers. Las Vegas odds-makers say he's now favored to win. If the market keeps going down . . . how will Biden do in the polls? ("It's the economy stupid", as some advisor once had to remind Bill Clinton).

We WILL see an actual rate cut, as we get closer to the election. Whether or not inflation has changed. Or at least there will be a speech promising a rate cut.

I'm just sayin' . . .

Fed members' updated interest rate outlooks rock markets (msn.com)

windinhishair · 61-69, M

Not to worry. The monthly jobs report came out this morning and continues to show a robust labor market. The stock market is already up over 220 points as a result.

I'm just sayin'...

SusanInFlorida · 31-35, F

@windinhishair so . . . if Fed Rate increases are supposed to tame inflation, and this is supposed to happen by REDUCING consumer demand, (and hiring), does that confirm my observation that the Fed actions have been completely ineffective?

windinhishair · 61-69, M

@SusanInFlorida Not at all. Inflation is running around 3.1% right now, which is much lower than it was two years ago, and close to the 30 year average. So the Fed has been effective in bringing interest rates down, and the economy and labor market have responded favorably. If you lower rates too much at this point, you risk triggering increased inflation again. They obviously are slowly reducing rates, which given the current economic conditions, is exactly what they should be doing.

I'm just sayin"...