The Fed: Neutral Or Bust? Risking Inflation, Market Meltup, and a Strong Economy

Something’s amiss with Fed Chair Powell’s explanation for lowering the federal fund rate a second time in two months despite an economy he admits is performing remarkably well. He tied the rationale for the move to the theoretical “neutral FFR,” implying that monetary policy needs to be less restrictive to reach that point, even though that point is intrinsically unknowable. Also implied was that the related risks are worth taking—including potentially overheating a strong economy, untethering inflation, and inciting a stock market meltup. Eric and Ed disagree that risking all that for an elusive goal makes sense. … Also: A few more questions they would have liked to put to Powell at his Thursday presser.

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[phillorapter]

Predicting inflation starting to rise again this quarter while leading indicators showing economy slowing (not to mention governm*nt figures pumped up for the election). Global economy very weak which affects US. Fed dropping rates 0.50 shows they're VERY worried about financial downturn/crisis. interest rates coming down are also an indication banks are LESS willing to loan money into existence. The question here is where is the inflation going to come from in the near term? Consumers are mostly tapped out which is 70% of US economy (consumption). Yes inflation very likely to return but not before it continues to come down... Inflation can be a concern, but remember, certain assets like stocks and Crypto’s acts as a hedge. Long & short-term trading is generally safer, allowing investors to weather market volatility. I have managed to grow a nest egg of around 3.2 B'tc to a decent 27B'tc in the space of a few months... I'm especially grateful to Seren Wintersun, whose deep expertise and traditional trading acumen have been invaluable in this challenging, ever-evolving financial landscape.

[mvdw]

This content is always stellar. One of the few macro guys I genuinely respect

[sewnsew]

Ed Yardeni has been doing great in his prognostications

[RashelYeva]

!I just switched up my Roth IRA to 50% SCHD, 25% SCHX, 25% SCHG, and my Roth 401k is 70% vanguard S&P 500 index, 20% vanguard growth index, and 10% vanguard international index. Seeking best possible ways to grow $350k into $2m+ before retirement.

[amarkmanpeters]

For the market, it’s all about profit margins! 🙏

[kurkinet]

The young Gent' Eric is quite good!

[MonteRosa]

What about trump’s economic policies increasing the federal debt by $ 7.75 trillion. Why do you ignore that fact completely? Very irresponsible!!

[SigFigNewton]

So their story is still that labor market trends will reverse on a dime, eh

[demonridera]

Everyone is in fantasy land. There are two sides to a story. The key issue is, will the dollar be stronger or weaker. The present rally is based on a strong dollar drawing liquidity into US. You cut taxes that reduces revenue = higher deficit. You deport cheap labour= higher labour cost. You impose high tariffs = higher prices. So the prescription is for higher inflation. That leads to a weaker dollar

[jamesedwards]

As for RATES, Powell seems to be chasing the Two Year, which today is near 4.254

[apothe]

arent tariffs on everything a bad idea lol

[Atungp]

What if China doesn’t care about the 60% tariff? Is Trump going to raise it to 120%, or 200%??? Can US bond market hold up? Can US Stock market hold up? What happens to Trump’s rhetoric, then?