The Fed Is Giving Investors Fair Warning!
Guest Post by Dennis Miller at Miller On The Money
Richard Maybury provides a realistic assessment:
“…. Everybody is always trying to figure out what these people (The Fed) are afraid of at any given moment, so we can get ready for their actions against it.”
Despite overwhelming evidence that inflation is nowhere close to the Fed’s 2% target, Chairman Powell continues to trumpet three rate cuts before year-end.
Expert Fed watcher Chuck Butler recently told us:
“Well, three rate cuts before the election would certainly help the current administration. It will be a rally cry for the stock market, of which most people (incorrectly) associate with the economy.
What most people, traders, hedge fund managers, investors, etc. don’t understand is that it has been proven (a fact) that inflation rebounds on its own. If the Fed Heads cut rates too soon, inflation will come back, and with a vengeance. It happened to Paul Volcker.
While rates have held steady, Powell still signals rate cuts ahead. Credit Bubble Bulletin tells us, ‘Powell and the Fed surely recognize the backdrop, yet they continue to deliver the music Bubble markets are eager to dance to: No more rate increases.’
I recently wrote, ‘The Fed Has an Itchy Trigger Finger’:
‘Former Treasury Secretary Lawrence Summers criticized the Federal Reserve for continuing to signal that it’s prepared to lower interest rates in coming months, despite a strong economy that’s giving off projections of still-too-high inflation.
My sense is still that the Fed has itchy fingers to start cutting rates and I don’t fully get it, …given how the economy and financial markets are performing. I don’t know why we’re in such a hurry to be talking about moving towards the accelerator.’
If Powell delivers as promised, he will find an excuse to drop rates, creating a much bigger inflation problem for the next administration.”
If rate cuts happen, what “actions against it” should investors be taking?
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Author: Dennis Miller
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