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#18,551
#18,551
lawgator1 said:
Anticipated rate cuts? I remain unconvinced given core CPI of 3 %. Just don't know how you square that with the Fed's goal of 2 %. A few years ago everyone jumped on the Fed for not realizing sooner that inflation was systemic and not transitory, and now those same people are criticizing the Fed for not assuming that current inflation is transitory.
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The main thing keeping inflation somewhat in check is housing prices are tepid.

Tough spot for the Fed. Jobs reports indicate a cut is needed. Inflation reports indicate cut isnt needed. Adding in more stimulus from OBBBA plus tariff uncertainty makes it a tough decision...
 
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#18,552
#18,552
lawgator1 said:
Anticipated rate cuts? I remain unconvinced given core CPI of 3 %. Just don't know how you square that with the Fed's goal of 2 %. A few years ago everyone jumped on the Fed for not realizing sooner that inflation was systemic and not transitory, and now those same people are criticizing the Fed for not assuming that current inflation is transitory.
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Remember when rates were moving higher a couple of years ago, the familiar refrain was "you have to discount those tech earnings at a higher discount rate, and they are growth stocks so those earnings are even further out into the future than normal stocks, so that's why they're getting hammered." Well, the S&P bottomed out on 10/13/22 at 3491. The yield on the 10-year that day was 3.95%. Almost 3 years later, the yield on the 10-year is even higher (4.29%) and the S&P is 84% higher.

I think it confirms something I've thought for a long time which is that equities don't care as much about the level of interest rates themselves as much as the rate of change in them. Rates are still hovering near levels not seen since before GFC, but they've been there for about 3 years now and it doesn't freak anybody out. I think it was the rate of change from COVID until Fall 2022 (and specifically that final push higher from ~2.6% to ~4.25% in 3 months) that caused so much angst, not so much that rates were at the levels they were at. There's just a lot of uncertainly when they're moving that fast, just like with the tariffs.

As for rate cuts, Fed funds futures are now pricing in a 95% chance of a September cut. I honestly don't know how many are there. As you mentioned inflation is above the Fed's target (nobody seems to mention that anymore) and the economy isn't weak.
 
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#18,553
#18,553
A couple of days ago I saw or heard that the Fed rate cuts will be 0.75% in the last 4 months of 2025. What was in doubt was whether the entire 0.75% happens in September, 0.25% each in September, October, and December or 0.5% and 0.25% in 2 of the 3 meetings.
 
#18,554
#18,554
Thunder Good-Oil said:
A couple of days ago I saw or heard that the Fed rate cuts will be 0.75% in the last 4 months of 2025. What was in doubt was whether the entire 0.75% happens in September, 0.25% each in September, October, and December or 0.5% and 0.25% in 2 of the 3 meetings.
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My guess is they will cut in Sept, hold in October and will play Nov and Dec by ear...

Only chance they dont cut in Sept is if the BLS throws out a job number that is utterly ridiculous...
 
#18,555
#18,555
Thunder Good-Oil said:
A couple of days ago I saw or heard that the Fed rate cuts will be 0.75% in the last 4 months of 2025. What was in doubt was whether the entire 0.75% happens in September, 0.25% each in September, October, and December or 0.5% and 0.25% in 2 of the 3 meetings.
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Talking heads are indeed saying that.

I'm not sold that J-Pow is aligned with any changes anytime soon.
 
#18,556
#18,556
Jax_Vol said:
Talking heads are indeed saying that.

I'm not sold that J-Pow is aligned with any changes anytime soon.
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I am also surprised by the apparent consensus that there will be a cut in September given both the numbers today and the upward trend of the inflation numbers over the last few months. It seems like everyone bases that on some combination of a) there's a lot of political pressure to cut in September, and b) though inflation is on the rise its not as fast as many thought when tariffs were first announced.

Neither of those changes the reality that smoldering inflation, at an unacceptable level and slowly worsening, remains and shows no signs of suddenly reversing.
 
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#18,557
#18,557
BigOrangeMojo said:
My guess is they will cut in Sept, hold in October and will play Nov and Dec by ear...

Only chance they dont cut in Sept is if the BLS throws out a job number that is utterly ridiculous...
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FOMC meets 3x after summer. This year they’ll skip November.

9/16-17
10/28-29
12/9-10

In 2024 they skipped October.

I’ll guess 0.25%, 0.5%, and 0.0%.
 
#18,558
#18,558
Thunder Good-Oil said:
A couple of days ago I saw or heard that the Fed rate cuts will be 0.75% in the last 4 months of 2025. What was in doubt was whether the entire 0.75% happens in September, 0.25% each in September, October, and December or 0.5% and 0.25% in 2 of the 3 meetings.
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JMO, I think we get two .25 cuts, at the most, through the end of the year. I think the Fed is afraid to overshoot and we know they like to take their time to see it work through the system. They were late getting ahead of inflation as they thought it to be “transitory” and I expect them to drag their feet wrt cuts as I think they still view inflation as a threat although things have stabilized some.
 
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#18,559
#18,559
Vol737 said:
JMO, I think we get two .25 cuts, at the most, through the end of the year. I think the Fed is afraid to overshoot and we know they like to take their time to see it work through the system. They were late getting ahead of inflation as they thought it to be “transitory” and I expect them to drag their feet wrt cuts as I think they still view inflation as a threat although things have stabilized some.
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They definitely don't like to overshoot.

If any, perhaps one cut for christmas.
 
#18,560
#18,560
Vol737 said:
JMO, I think we get two .25 cuts, at the most, through the end of the year. I think the Fed is afraid to overshoot and we know they like to take their time to see it work through the system. They were late getting ahead of inflation as they thought it to be “transitory” and I expect them to drag their feet wrt cuts as I think they still view inflation as a threat although things have stabilized some.
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I agree with this thought. Inflation threat is very real depending on what trump decides with tariffs. Companies are only going to eat costs up to a point, and a lot of the inventory hasn’t worked through to the consumer at this point.

Will also be interesting to see the effect of rate cuts on the housing market. Will obviously help lower cost of borrowing, but also think there’s a lot of buyers that have been sitting on the sidelines waiting for rates to go down. May spark demand again and cause housing prices to rise further.
 
#18,561
#18,561
Vol737 said:
JMO, I think we get two .25 cuts, at the most, through the end of the year. I think the Fed is afraid to overshoot and we know they like to take their time to see it work through the system. They were late getting ahead of inflation as they thought it to be “transitory” and I expect them to drag their feet wrt cuts as I think they still view inflation as a threat although things have stabilized some.
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They're almost always late, both with cuts and raises. It's basically an impossible job.

They were too slow raising in the mid 90s, too slow raising in the mid 2000s, too slow cutting in 2007, too slow raising throughout the 2010s, and too slow raising post-COVID. And post-COVID, they continued the asset purchases for too long. If memory serves they were still buying hundreds of billions of dollars a month of MBS in late 2021, when the economy was very clearly recovering and inflation numbers were beginning ticking up.
 
#18,562
#18,562
05_never_again said:
They're almost always late, both with cuts and raises. It's basically an impossible job.

They were too slow raising in the mid 90s, too slow raising in the mid 2000s, too slow cutting in 2007, too slow raising throughout the 2010s, and too slow raising post-COVID. And post-COVID, they continued the asset purchases for too long. If memory serves they were still buying hundreds of billions of dollars a month of MBS in late 2021, when the economy was very clearly recovering and inflation numbers were beginning ticking up.
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And hindsight is 20/20
 
#18,563
#18,563
Go aeiou said:
And hindsight is 20/20
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Not all of those are a 20/20 hindsight thing, especially being too late post-COVID and too slow raising rates in the 90s. Rates stayed essentially unchanged from 1995 to 1998, as the economy was roaring, then we got a Greenspan put in late 1998 due to LTCM/Russian financial crisis, which I'm not sure were ever going to impact the broader global economy. I think the LTCM cut really cemented the "the Fed will cut to save the markets" narrative that persists basically to this day.
 
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#18,565
#18,565
Vol737 said:
JMO, I think we get two .25 cuts, at the most, through the end of the year. I think the Fed is afraid to overshoot and we know they like to take their time to see it work through the system. They were late getting ahead of inflation as they thought it to be “transitory” and I expect them to drag their feet wrt cuts as I think they still view inflation as a threat although things have stabilized some.
Click to expand...
I’d love for the Fed to aggressively lower rates and then convert a large percentage of the short term debt into a better rate on a longer term. Raise them back up after 6 months if inflation takes off. Interest on the national debt is taking too much of the federal budget.
 
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#18,566
#18,566
walkenvol said:
That falling knife is up 4.2% since i jumped aboard! Not bad for 2+ weeks. How far are you hoping to stay in?
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Already out.

Got distracted by a falling health care stock. That knife carved me up.

LMT is a good company. If I could have kept my eye on the ball, I would have held them up to around 8-9%.
 
#18,568
#18,568
BigOrangeMojo said:
More options are better than less options. 10 years ago, many 401Ks were loaded with crappy funds...

People demanded funds put in targeted date funds, index funds, and allow for Roth.
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It just struck me today. This may be the only route for your kids to participate in home ownership - invest in the PE firms that are buying all the property/homes. Sounds great.
 
#18,570
#18,570
walkenvol said:
I’d love for the Fed to aggressively lower rates and then convert a large percentage of the short term debt into a better rate on a longer term. Raise them back up after 6 months if inflation takes off. Interest on the national debt is taking too much of the federal budget.
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I think I read somewhere that’s the play intended here, Trump wants to refi a lot of the debt at lower rates soon, which is hard to argue against.
 
#18,571
#18,571
Jax_Vol said:
Last week, I dove back into Lockheed Martin (LMT) as they hit a 52-week low.

Was that value investing or attempting to catch a falling knife?

Right now, feels like a razor sharp saber.
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Well, keep in mind the BBB bumped DoD budget to $1T. I don’t follow LM, but I might not put more $ in until you’re sure it’s found a bottom. They’ll be fine. I’m in the same boat with UPS. Got in under $100 after a big pullback, hung around there a while, bought in and then it retreated below $90. Staying put, but not adding until a see a confirmed uptrend and better news.
 
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