E Market Briefing For Wednesday, March 4

Visibility for a Fed rate cut - has been evident for about a week, aside the President's cajoling for easier monetary policy, and simply because it was set-up with the Fed Funds rate below the entire U.S. Yield Curve.  

My own view was that the Fed would bend (surprised it didn't happen on the weekend or yesterday, but knew they might wait for the G-7 meeting communique), and that's what they did, with the pretext of no instant cut after the G-7 (for a couple hours) supposedly intended to be a 'surprise'.

  

No surprise at all. Again along with everyone else we thought they'd cut, based on the Yield Curve and of course White House sidelined pressure. At the same time 'on the surface' we believed they would, be also thought it unwarranted with regard to attracting money to the U.S., and keeping a decent advantage. The President felt it unwarranted, but presumably he is speaking from a political perspective, believing a high S&P is probable if there's no incentive at all to go into the Bond markets, hence TINA (There Is No Alternative).  

TINA is dangerous as the market showed with the 'trench warfare' today. While the actual Fed cut became a 'buy the rumor / sell the news' event, it nevertheless has nothing to do with actual economic prospects (more in a moment), any more than this rate cut makes a dent in business activity or even imports and exports (it's minimal and that's a cover story Trump promotes, while it allows him not to say he wants lower rates to push up the S&P and hence his Election prospects).  

Those prospects may be solid anyway given the possible alternatives, at the same time the rate cut does little to cushion angst, build support from a financial perspective, or even increase morale among the citizenry. Just the opposite perhaps, because if things are so good in the economy then why cut rates. That's what most people not looking at the Yield Curve will ask after this, and it does not instill confidence in my opinion, for now.  

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Gene Inger 3 months ago Author's comment

The rate cut was to deflect Pandemic Bond default (the WHO declaring a panic would trigger release of those funds, and possibly harm a bank or hedge fund investor. That is what I alluded to last night and discussed on our 3 intraday comments you don't see here. Please join us by subscribing to Daily Briefing ($159.) at www.ingerletter.com/subscribe and this week as the market alternates big moves, I'll upgrade you to our Premium MarketCast (normally 390) 'on the house'. I cannot just provide everything here without compensation. Thanks!

Currency Trader 3 months ago Member's comment

Will do Gene, thanks

Gene Inger 3 months ago Author's comment

thanks! when you sign-up you might also send me feedback or an email to: gene ingerletter.com and that way I'll know it was from TalkMarkets and set it up with the upgraded service.

The comment was deleted!

George Lipton 3 months ago Member's comment

Good question.