[FxTrader]

Originally Posted by CoachKandSportsguy

former finance guy to the rescue.

1) The current rates of inflation have trended down and is close or the core is at or below the fed's target rate of 2%. Primary goal accomplished!

2) the labor market is much weaker than the headline numbers show. Why is that statement appear to be true? Because the annual true up adjustment was down about 700,000 jobs or so, which is about 70K per month overstated Likewise the month following the monthly inithialreading, true up adjustments are all negative / down as well. So for what every reporting source is being used for the initial monthly reading, is toohigh, and so the market is weaker in reality, than the BLS is portraying

3) The Sahm rule is right at the labor recession threshold, meaning that any further weakness in the labor market is signal a recession is imminent.

4) Powell is a being a bit more political than he would ever admit, but if there was ever a time to avoid any labor recessions or numbers or indicators showing that a recession is imminent, now is the time to reduce rates to avoid any negative economic press prior to the election.

Does that work for you?

You are correct on all 4 points. However, only the RATE of inflation (how fast prices are going up) have slowed down. Actual prices? Maybe they dropped a little, but everything is still over 2x 2021 prices. What's scary is Crude is back to 2021 prices, but gas is not. What's going to happen on the next wave.... And you can bet we get it. With rate cuts and the government spending money like a drunken sailor, it's sure to happen.

We should also point out (not always, but many times) rate cuts are overall bearish for the stock market. See 2007. The market topped a few weeks later after they started cuts on exactly the same day back then.

The political landscape looks like 1968, so does the stock market. It topped in November back then. Maybe we get another trip up into Q4 2025, but too soon to tell. I need to see where this leg tops. S&P500 between 5900 & 6200, we might be done for awhile. Lower before a drop & my scenario into 2025 plays out.

As for why the indices are up so high -- Well if prices have 2x & 3x for everything, it makes sense an index of 30 or 500 stocks also would cost more to own.

Addressing point #2 you made -- Yeah, and that's part of what leads to a recession.

The BLS has revised everything. How they report CPI, weighting of individual components, and of course as you know, somehow managed to sneak in a revision of 813,000 jobs lost which no one will pay attention to until the election is over.

[Normal]

Originally Posted by FxTrader

You are correct on all 4 points. However, only the RATE of inflation (how fast prices are going up) have slowed down. Actual prices? Maybe they dropped a little, but everything is still over 2x 2021 prices. What's scary is Crude is back to 2021 prices, but gas is not. What's going to happen on the next wave.... And you can bet we get it. With rate cuts and the government spending money like a drunken sailor, it's sure to happen.

We should also point out (not always, but many times) rate cuts are overall bearish for the stock market. See 2007. The market topped a few weeks later after they started cuts on exactly the same day back then.

The political landscape looks like 1968, so does the stock market. It topped in November back then. Maybe we get another trip up into Q4 2025, but too soon to tell. I need to see where this leg tops. S&P500 between 5900 & 6200, we might be done for awhile. Lower before a drop & my scenario into 2025 plays out.

As for why the indices are up so high -- Well if prices have 2x & 3x for everything, it makes sense an index of 30 or 500 stocks also would cost more to own.

Addressing point #2 you made -- Yeah, and that's part of what leads to a recession.

The BLS has revised everything. How they report CPI, weighting of individual components, and of course as you know, somehow managed to sneak in a revision of 813,000 jobs lost which no one will pay attention to until the election is over.

I agree with everything , but wouldn’t correlate the gas with oil proportional to prior to 2021 prices. Refining expenditures for labor have increased due in large part to inflation and new regulations.

[FxTrader]

Originally Posted by Normal

I agree with everything , but wouldn’t correlate the gas with oil proportional to prior to 2021 prices. Refining expenditures for labor have increased due in large part to inflation and new regulations.

That's just it -- The cost of EVERYTHING has gone up and remained up while The Fed is cutting and we're still spending. How can another wave of inflation NOT be at our doorsteps in the near future?

If everything was so rosy, there would be no need to cut.

[Normal]

Originally Posted by FxTrader

That's just it -- The cost of EVERYTHING has gone up and remained up while The Fed is cutting and we're still spending. How can another wave of inflation NOT be at our doorsteps in the near future?

If everything was so rosy, there would be no need to cut.

Inflation will always happen because after a while, a human only wants MORE. It’s kind of like the raccoon who is trapped in the log, because they won’t let go of the shiny tin foil.

[Caymus]

The September Consumer Confidence Index had a big drop. Maybe The Fed had an advanced warning.

[CoachKandSportsguy]

people are starting to get quoted mortgage rates in the 4s %, that will kick start the housing market!

Just in time for the chilly snow creatures to start thinking about a FL house!

[asianthree]

Originally Posted by CoachKandSportsguy

people are starting to get quoted mortgage rates in the 4s %, that will kick start the housing market!

Just in time for the chilly snow creatures to start thinking about a FL house!

None of our 4 banks are offering 4%, nor our 2 independent mortgage guys. Could you reference the financial banks or companies? I am sure some would be happy to use them at 4%

[Aces4]

Originally Posted by CoachKandSportsguy

people are starting to get quoted mortgage rates in the 4s %, that will kick start the housing market!

Just in time for the chilly snow creatures to start thinking about a FL house!

House pricing has gone crazy with inflation. Wages, material, lots, utility hooks ups and a huge flood of additional people cramming the housing market to drive up prices even more so that rate cut isn't enough to significantly dent housing sales.

Affordability is a real issue and pushing rates lower will only raise the prices more. Supply and demand.

[Normal]

Originally Posted by CoachKandSportsguy

people are starting to get quoted mortgage rates in the 4s %, that will kick start the housing market!

Just in time for the chilly snow creatures to start thinking about a FL house!

One could hope? But, actually rates went up today, the cuts were already factored in before the announcement by most lenders. 5.49% is the best offering , but the national average is 6.21%.

Current Mortgage Rates: Compare Today's Rates | Bankrate

Banks got burned lending at low rates during COVID, they won’t do it again. Underwater lending was a huge error as many now maintain mortgage loans at 2.3% while paying twice that on their CDs to the same customers. I doubt you will see much movement in interest rates for the customer for quite some time. Builders are doing some deals, but it all comes out in the wash later. Rates will likely stay solid in the mid 5s to 6% area at the very least till years end.

[kkingston57]

Originally Posted by Boomer

Inflation peaked at 9.1% in mid-2022 as we were making our way out of Covid.

NOW inflation is at 2.5%.


The Fed does not operate in a vacuum. There are 19 people on the committee and 12 of them get to vote. 11 of the 12 voted for the half point cut. The other one wanted a quarter point cut. But all agreed the time has come to cut and cut again.

The economy is not a horror like some are being led to believe. We are in recovery. Be glad.

This So Sad, Too Bad routine I have seen from those who have been rooting for a recession makes no sense to me. I must assume they have been dysinformed.

I accept the fact that my money market is going to take a hit, but I don't think we will have to return to nothing. I think this rate cut is going to drive the economy in an even more positive direction -- so I can give up something to get something. I hope to see 5% mortgages so the housing market can normalize and first time buyers can have a chance and corporate landlords won't have really cheap money to use to hog all the starter homes and gouge renters. That would be good for the economy on so many levels. Interest rates have been obscenely low for a lot of this century. Maybe, just maybe, we are on our way to normal.

Boomer

And my preferred stocks are getting back to reasonable pricing

[kkingston57]

Originally Posted by NoMo50

Don't be fooled by the spin. Sure, 2.5% inflation is better than 8%, but let's be careful calling it a win. This is on top of the cumulative high inflation rates over the past 3 years. Don't kid yourself...you feel it with every trip to the grocery store, the gas station, your favorite restaurant, etc.

Yes, the operation was a success...but the patient died.

;.s

Lets get fuel out of the equation. Saw diesel at <$3.00 a gallon on 9/24 in Florida Paid $5 in the 2000's

[MorTech]

When you rob Peter to pay Paul using inflation, Paul doesn't complain...cuz Paul is a Cantillionaire.

Be the Cantillionaire...Not the fool.

I actually feel sorry for people who throw away their one and only life for $30 per hour. No wonder there is psychological derangement, childless families and drug addiction problems...how could there not be?

[Aces4]

Originally Posted by kkingston57

;.s

Lets get fuel out of the equation. Saw diesel at <$3.00 a gallon on 9/24 in Florida Paid $5 in the 2000's

Ah, the year 2000... Covid is on steroids in the US.

[Caymus]

So, what day will the yield on the 90-day T-bill fall below the 2 year?

Treasury Rates, Interest Rates, Yields - Barchart.com

[CoachKandSportsguy]

Just to keep an open mind to the bear case in this link, which can happen after the fed starts cutting fed funds rates, as in this historical chart. yes, this is your broken clock bearish reminder . . .

https://x.com/BankofVol/status/1839167755242594719
In the past fed rate cuts from these levels, they were right before a significant market down turn, which is still possible. This chart is why there are people actually get bearish. . Yes the market bounces back, but remember that in retirement, you are dependent upon the total amount of investments lasting a long time. .



So the 2000 dot com bust was too much small cap speculation on companies with no visible return on investments, and rising interest rates, before the fed funds rate cuts.

So in the 2007/8 housing bubble, there was too much borrowing in the housing market and when oil prices went sky high, and interest rates hit some level of significance, no could afford their payments any more and pay for gas to go to work.

So where might the 2024/25 bubble bursting indicators show up? Passive index investments correlations rising to very high levels, (one of the inherent risks in indexing) and the treasury having poorly received auctions as the dollar keeps falling. .

just don't assume that market corrections have been eliminated after almost 20 years, especially with government spending being a larger and larger part of GDP growth, due to automation and technology advancements eliminating many middle class jobs. .


sorry to run, but the doorbell just rang, and the neighbor across the street has a clock in his hands which isn't moving. .