Some investors held out until the very end hoping for a 1/2 point interest rate cut at the FOMC meeting next week. Now with the consumer price index (CPI) release this morning the air is coming out of that balloon as stocks take a tumble. I suspect that the CPI release will be in the rear view mirror come mid day today—but who really knows–and does it matter to income investors?
The rate cut for next week is solid at 1/4%–we know they have to cut since Powell has pretty well backed himself into a corner with all but promising a rate cut–other Fed officials are on board with this cut. Regardless of what the cut turns out to be I am a ‘buyer’.
Today I will be buying based upon my allocation of funds—over the weekend I calculated how well I am diversified with preferreds and baby bonds and honestly going through the numbers I was somewhat surprised. I am overweight in closed end fund (CEF) issues as well as in insurance. You can be certain I won’t be buying any of those sectors today. Mostly likely I will add to my mREIT holdings–we’ll see.
Whatever happened to the meme of fiscal dominance? I thought that The Debate emphasized the fact that fiscal policy will continue its irresponsibly loose path,regardless of who is elected. Absent material change, how much more will the debt grow in the next four years? Won’t the stimulative effects of existing legislation make the Fed less relevant even it is cutting rates?
Finally, whatever happened to QT? What is a “normal size” for the Fed’s balance sheet? Crickets from the Fed?
Crazy movement in the DOW– low was 744 less than 9/10 close, then climbs 869 pts to close up 125. Whiplash!
Past midday today and stocks are up. (SPY 0.81% as of this writing). Agree too about Powell, 25 bp probably it. Am no expert but seems he was late and too timid initially in hiking rates to control the inflation produced by the massive increase in money supply imo. And now perhaps late and maybe too timid in decreasing the rates. But what do I know. Look forward to your buy recommendations.