Third Cut’s the Charm?
If there’s a recession scare in the air, you can trust the Federal Reserve to cut it out. Chairman Jerome Powell makes his next move on interest rates today, but all-time market highs are backing him into a corner!
Some believe that the under dark clouds of Brexit and the trade war, investors have bullied Fed Chair Jerome Powell into cutting interest rates, and letting booming markets stray too far from a ropey economy. Today, he’s expected to make it a triplet of cuts. That would be a dovish call yet again, trimming the cost of taking risks in America and giving stock pickers even more candy during this bull run.
Don’t forget that only two days ago, the S&P 500 hit an all-time high. That means whatever his monetary move, JayPow’s speech at 2:30 PM today will come with an important backdrop. With Brexit and trade negotiations up in the air, nobody knows if the economy will strengthen or weaken for the rest of the year. Powell needs to buy himself time to watch events unfold and decide what his long-term plan will be. Some smooth talking might charm markets, and win him until December to decide what to do next!
“In his mind, he has two or three insurance cuts. This is the third, and now he sits back and waits,” says Peter Boockvar, chief investment officer at Bleakley Advisory Group. A year after three cuts in a row, stocks historically rally 20%. There’s no saying what could happen this time, at least not by anyone other than Jerome Powell in his speech today! We’ll be watching, will you?