Stock Trading

[sweetandsour]

The Fed may or may not be interested in politics, but the politicians are interested in the Fed.

https://www.barrons.com/articles/trump- ... e=20240809

This is nothing new. I remember when President George Bush the First complained that Alan Greenspan ("The most famous civil servant since Pontius Pilate") wasn't lowering rates fast enough during the 1992 election campaigns.

Just as the Supreme Court needs to be independent of Congress and the Executive branch, the Federal Reserve Board needs independence and space to do its job. If the Central Bank becomes political, then America becomes even more like China.

Of course, there are the jabberheads who complain about the Central Bank and argue for abolishing it, because they have no knowledge of history. High inflation and deep recessions used to be regular occurrences in 19th century economic history, along with frequent bank panics. But they had the gold standard then, which was a natural force toward equilibrium.
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The President already "has a say" in the economy. President Biden signed a $1.9T covid relief act.... increasing the money supply by 36%, with no productivity to balance it. That's an economic tropical storm forming in the Atlantic, and there's bound to be cycles of inflation and recession in the forecast.

So basically we sent Captain Powell sailing into a typhoon, and now we want to blame him for taking on some water and spoiling some cargo? Without the FED, we would have sunk.

Every president since FDR signs deficit spending bills that compound our debt. The federal debt increases by $1 trillion every 100 days. That's $5,500 per tax payer. $11,000 per taxpaying family. Let Mr. Trump work on this.

Thanks, I always enjoy getting your thought(s). And speaking of storms ... from Barron's review&preview this evening,

"The bottom line is that this past week was basically a storm that came and quickly went away," writes Apollo Global Chief Economist Torsten Sløk. "And the storm is now basically over. And we will all go back to watching the incoming economic data."

"And boy, is there economic data looming. Next week we get updates on retail sales, consumer sentiment, and—most importantly—consumer price inflation. Buckle up."

[Del]

Thanks, I always enjoy getting your thought(s). And speaking of storms ... from Barron's review&preview this evening,

"The bottom line is that this past week was basically a storm that came and quickly went away," writes Apollo Global Chief Economist Torsten Sløk. "And the storm is now basically over. And we will all go back to watching the incoming economic data."

"And boy, is there economic data looming. Next week we get updates on retail sales, consumer sentiment, and—most importantly—consumer price inflation. Buckle up."

Yup.... Producer Price Index on Tuesday, and Consumer Price Index on Wednesday.

Low readings will have the market drooling over the possibility of 50 basis point drop when the FED meets on September 18.

[Del]

SPX gapped up this morning, returning to a level last seen before the Panic of August 1.

The panic started when Aug 1 weekly new unemployment claims came in much higher than expected. Fears of mass lay-offs, along with a pull-back of supply orders by manufacturers, triggered the panic. Then total unemployment came in higher than expected, flaming fears of recession.

The News that triggered today's exuberance:

New unemployment claims have been less than expected for two weeks in a row.

Retail sales for July reported much stronger than expected. American consumers are spending confidently.

Berkshire-Hathaway reported their earnings and portfolio. Warren Buffet is optimistic about the American economy and consumer spending.

Also, Mr. Market is counting on the FED to reduce rates by at least 0.25% in September. There is significant hope that it will be a 0.5% cut (to quell recession fears, and some say to help Kamala).

[sweetandsour]

I'm glad I didn't sell my Fidelity Equity Index fund last week. But I'm not glad about having to sit on the sidelines either; I missed some great trading opportunities. But, it couldn't be helped - I've simply been too busy. Re the FED, personally I think you can count on a Sept rate reduction of at least 0.25; I don't think 0.5. We'll see. Keep your powder dry.

[Del]

I'm glad I didn't sell my Fidelity Equity Index fund last week. But I'm not glad about having to sit on the sidelines either; I missed some great trading opportunities. But, it couldn't be helped - I've simply been too busy. Re the FED, personally I think you can count on a Sept rate reduction of at least 0.25; I don't think 0.5. We'll see. Keep your powder dry.

We don't have to speculate about what the FED is going to do. The Market does that for us.

95% chance of 0.25% cut. "Significant" chance of 0.5%. Mr. Market waivers daily in his confidence on this.

http://primerate.fedprimerate.com/searc ... e_forecast

Prime Rate Forecast

As of right now (Aug 4), our odds are at 95% (very likely) the Federal Open Market Committee (FOMC) will vote to LOWER the benchmark target range for the fed funds rate (TRFFR) by at least 25 basis points (bps) at the September 18TH, 2024 monetary policy meeting.

If a 25 bps cut happens, the United States Prime Rate (a.k.a Fed Prime Rate) would decline from the current 8.50%, to 8.25%.

There is also a very real chance that the FOMC will cut by 50 bps next month, setting the TRFFR at 4.75% - 5.00%. This would result in a U.S. Prime Rate of 8.00%, a level not seen since March of 2023.

Thus far, Powell's FED has earned my trust in their integrity by being very transparent with the core data they are managing and the signals that they are looking for. It is time for a rate cut, and 0.5% would not be imprudent. The FED does not give any indication of succumbing to pressure from Democrats or corporate lobbies.

When the cuts happen, Biden/Harris will crow about the success of their policies.
Trump campaign will remind everyone that Biden/Harris policies caused the high energy costs and inflation, and delayed the economic recovery with their covid policies.

[sweetandsour]

Better hang on for a rough ride for the next week or two, I'm thinking.