MAGA Irrelevant – Federal Reserve Cuts Rate Quarter Point, First Since ’08 – Why It Doesn’t Matter…

In 2015 CTH outlined how candidate Donald Trump’s proposals were in-line with those who had long argued for a return of “economic nationalism”.  We also outlined when those proposals (now policy) are implemented, Fed action would be essentially irrelevant.

The Federal Reserve is pegged to the Wall Street Economy.  President Trump’s policies are pegged to the Main Street Economy.  There is a disconnect; a new dimension in U.S. economics; and very few people understand what happens in this space between them.

Thirty-five years ago Fed monetary policy impacted the U.S. economy directly because almost all activity (durable good manufacturing) was within our borders.  The natural dynamic of inflation could be influenced by the Fed.  Rate changes could offset inflation and also enhance domestic investment etc.

However, as time progressed that manufacturing activity -the basic underpinning of middle-class jobs, wages etc- shifted overseas.  When monetary policy became controlled by multinationals (Wall Street influencers purchasing politicians), capital investment moved to generate purely higher profits.  Businesses, specifically manufacturing, went abroad.  As a consequence the determination of prices, ie ‘inflation’, was no longer influenced by the Fed because the actual economic activity was/is outside the U.S. borders.

We see this today.

President Trump’s middle-class policy, through tariffs, is intended to bring manufacturing back to the U.S.  China and the EU are trying to keep their manufacturing foothold by devaluing their currency and subsidizing their industries.

This action by China and the EU lowers the value of their currency, increases the value of the dollar, and simultaneously lowers the prices of their exports.  This offsets the U.S. tariffs, and the China/EU stuff costs less to import.  In essence, we import deflation.

No action by the U.S. Fed can change this pricing mechanism because the price determination is outside the reach of the Fed.  Hence, the disconnect.

NEW YORK (Reuters) – The U.S. dollar rose to two-year highs on Wednesday after Federal Reserve Chair Jerome Powell, having made the first cut to interest rates since 2008, signaled the move was not the start of a rate-cutting cycle.

[…] In a widely expected move, the U.S. central bank cut rates by 25 basis points to shore up the economy against risks including global weakness. But in the subsequent press conference, Powell said he viewed the cut as a “mid-cycle policy adjustment” rather than a broader loosening of monetary policy.

[…]  The statement upended expectations of some market participants who anticipated confirmation of further rate cuts. A day prior, traders had forecast at 35% chance of three cuts by the end of the year; on Wednesday afternoon that figure had fallen to 12%, according to CME Group’s FedWatch tool.

“They acknowledged strong labor markets, recent reasonable signs of moderate growth. It still leaves the playing field wide open as to what they’re going to do in future months,” said Tony Bedikian, head of global markets at Citizens Bank in Boston. (more)

♦RATE CHANGES –  Currently multinational investment is in a holding pattern, waiting to see what happens with President Trump’s global trade reset.  Manufacturing multinationals don’t know exactly where to put their investment money because they are waiting to see what happens with trade and tariffs.   They don’t want to invest in a new China factory only to see the end product become subject to POTUS Trump tariffs.

The Fed views those stalled investment dollars through the prism of a global economy, their historic reference.  Financial pundits have also been selling the global economy model for 35 years; so they too mistakenly view stalled (unappropriated) investment dollars as a sign the U.S. economy might be weakening.  It ain’t.

We are in the aforementioned flux space where Trump is favoring Main Street…. and all trade policy is shifted therein.

U.S. Federal Reserve lending rates won’t make the multinationals move their investment money until the geopolitical trade reset is worked out.  Ergo, lower Fed rates won’t currently help Wall Street…. Nor will lower Fed rates have much impact on Main Street because internal U.S. economic influences are larger and stronger than the Fed influence.

Because the Fed cannot influence prices of manufactured goods, the Fed cannot influence inflation.  The U.S. worker wage rates are stronger than any inflation; again the disconnect that CTH has noted for three years that will work in favor of the middle-class.

So long as the Fed is pegged to Wall Street, meaning has primary focus on lending to U.S. manufacturing multinationals; and as long as that lending (investment) is stalled pending the outcome of Trump’s trade and economic reset; the Fed is essentially irrelevant on the bigger dynamic.

If a variable rate mortgage loan goes up by $100/month, and simultaneously (outside of the Fed influence) the worker is getting a $300/month wage increase (currently 5.5% wage growth), there is no material negative impact.

If a variable rate mortgage loan goes down by $100/month, and the worker is still getting a $300/month wage increase, blue collar spending and savings jumps [current status], no substantive downside.   The blue-collar spending is a self-fulfilling prophecy. This is the reason why we noted in 2016 the Fed would essentially be irrelevant to Main Street.

The Fed remains pegged to Wall Street.

Trump policy remains pegged to Main Street.

We are in the space between.

Until this dynamic changes and the majority of the underlying economic activity is returned to the U.S action by the Fed is essentially moot to Main Street.

Once the U.S. economy rebalances; meaning once the trade policy brings more production based manufacturing and assembly back into the U.S; and once we reverse the 35-year Wall Street dynamic and become a more production-driven economy (where the best return on investment is inside the USA); then yes, Fed action will start to have influence.

When? Once the USMCA is ratified, President Trump will trigger tariffs on China. This will move all of the multinationals who are in a ‘holding pattern’ because they will see what areas are safe.  Capital investment will flow very fast.

Where? The China exodus will benefit North America (USMCA) and those ASEAN nations who have partnered with Trump and made proactive trade agreements.  That’s where the capital investment will flow.

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This entry was posted in Auto Sector, Big Government, Big Stupid Government, Donald Trump, Economy, Election 2020, media bias, President Trump, Trade Deal, US dept of agriculture, US Treasury, USA, USMCA. Bookmark the permalink.

76 Responses to MAGA Irrelevant – Federal Reserve Cuts Rate Quarter Point, First Since ’08 – Why It Doesn’t Matter…

  1. AvengerDave says:

    The global economy slowdown is largely due to losses in international corporations earnings. This is exactly what one would expect if Sundance’s hypothesis on Main street/ Wall street dual economy is accurate. As most already know… Well done Sundance!

    Liked by 4 people

    • bertdilbert says:

      Balancing trade means more for US and less for them. Them being the rest of the world. There would be a natural economic slowdown globally.

      Where the .25 cut does matter is in the housing market. Increased property values will be positive going into the election. This “feel good” will play into consumer spending. Trump chalks up another win and adds to his landslide reelection.

      Liked by 5 people

  2. JoeMeek says:

    China is going to end up without a dance partner.

    Liked by 3 people

  3. ristvan says:

    My view is this is not about monetary policy. PDJT is correct Fed acted too early and too forcefully with quantitative tightening last year. There was no evidence of inflationary danger to combat. PDJT has just jawboned Powell into fixing the mistake.

    Put differently, Fed just blinked. Powerful message for upcoming rallies.

    Liked by 17 people

  4. tax2much says:

    American in-flow capital built China and American out-flow capital can ruin them.

    Liked by 1 person

    • MattyIce says:

      They already have, they just don’t realize it yet!

      Like

      • MattyIce says:

        oops, sorry, wrong thread.

        Like

        • SwampRatTerrier says:

          Still the right comment though.

          Communist China has been busy hiding their steep decline for the past few years.

          Liked by 2 people

        • SwampRatTerrier says:

          34 Unforgettable Photos Of China’s Massive, Uninhabited Ghost Cities

          The country’s ambitious plans for urban growth have led to more than 50 abandoned cities whose empty buildings paint a dystopian landscape.

          https://allthatsinteresting.com/chinese-ghost-cities

          Liked by 4 people

          • ann says:

            SRT, I visited one. A few years ago.

            Dumping resources into weird mega Potemkin communities instead of replacing the multitude of truly ugly, concrete block apartments? China never struck me as irrational.

            external factors? , command economy hangovers?
            A blind man could see better options than pouring their capitol into prestige show pieces. .

            There was, probably still is, a lucrative waiting market of eager urbans.

            A cultural preference for residing in densely populated zones packed in tiny like sardines?
            Unlikely.

            Bernie fans should invest lots of time inhaling life in “socialist states. I object to their poorly informed personal whim permanently giving our power to the state.

            Like

  5. MattyIce says:

    Democreeps need to get off their dead asses and ratify the USMCA!

    Liked by 4 people

  6. Comrade Mope says:

    I think it is relevant in that Trump asserted his authority. In the future, if necessary, the Fed will now do what the president wants. The second time is always easier.

    Liked by 2 people

  7. vikingmom says:

    I started in banking, fresh out of college, back in 1983, when Ronald Reagan was in the middle of reversing all of Jimmy Carter’s disastrous financial policies, which led to the “malaise” speech that pretty much guaranteed he would be a one term president.

    Over the next two decades, I watched as American industry dried up and average middle class Americans now needed two incomes to purchase what their parents had easily afforded on one income. Factories closed, businesses went under, people began tapping the equity in their homes just to try to keep up with inflation, and somehow, Alan Greenspan earned the name “The Maestro” when in actuality everything he did made the situation worse for the American worker and better for the Globalists/lobbyists.

    I felt then like I was watching a train wreck in slow motion and there have been many times in the intervening years that I just wanted to throttle all the “experts” like Paul Krugman and Timothy Geithner because they clearly had ZERO idea how economics actually work. We finally have a businessman, who happens to love America, in the White House, and I am feeling hopeful for my kids and my country for the first time in decades!!

    Liked by 19 people

    • SwampRatTerrier says:

      Alan Greenspan certainly was “The Maestro” for Globalists/Lobbyists Bums…….

      Liked by 4 people

    • Fata Morgana says:

      The cabal has been operational over generations…..

      Liked by 2 people

    • dallasdan says:

      I agree with all you observations, and I lived them as you did, having started my professional career on Wall Street.

      SD is completely on-point, and the equities markets are rigged just like casinos. I assure everyone that though the equities slumped today, the “big cigars” made fortunes on the downside.

      The China trade stand-off is hurting the big players, and they don’t like it. It matters not to them that the President is fighting for “main street,” as SD appropriately describes it. Rather, they loathe him for doing it.

      It has not been mentioned, but the rate cut will hurt older, fixed income investors who can’t or won’t accept the substantial risk inherent in the equities markets. In a single day, even diversified mutual funds that are overweight with investment grade bonds and boast of favorably low beta (volatility) and standard deviation (diversification/earnings consistency) values can be rocked with losses that may devastate a modest investment portfolio. Being risk-averse when people age is often an economic survival technique for them.

      SD is clearly and simply summarizing what is a dissertation-length analysis.

      Liked by 3 people

      • vikingmom says:

        Yes, many many people never fully recovered from what happened to our economy under Jimmy Carter. Wages stagnated and interest rates skyrocketed, which was very beneficial to the big players who were heavily invested in the destruction of the American economy. The bank where I worked was a local institution that had been in business for over a hundred years and it was well-known and well-respected in the community. The grandson of the founder merged with another Regional Bank and he lost control of the board. Ten years later it was bought by a national banking conglomerate who proceeded to lay off most of the long-time employees. The CEO got a 26 million-dollar golden parachute and the employees and the customers got the shaft! The financial meltdown in 2008 was, IMHO, simply a way to punish or reward party loyalists and big political contributors.

        Liked by 4 people

        • dallasdan says:

          True, and the story of your bank can be told for countless others that were acquired by larger entities and non-senior executive level employees fired without appropriate severance packages. It was a very bad time, except for the “big dogs.”

          My condolences to you and others who were abused after years of dedicated service.

          Liked by 2 people

          • vikingmom says:

            Yeah, I was “grandfathered” in under an agreement that gave me full benefits, even though I only worked part time after my kids were born. When they refused to honor it (it was probably >1K per year total) I quit the bank, started homeschooling my kids and never looked back! It was actually a blessing in disguise for me but there were a LOT of people (both employees and customers) who were really screwed by their actions!!

            Liked by 1 person

            • dallasdan says:

              I appreciate your sharing your story with me, and I admire your initiative and determination in homeschooling your children. It’s great to get to know fellow Treepers on a more personal level than merely reading their words. 🙂

              Like

    • Ospreyzone says:

      I paid 11% interest on my home mortgage in ’83 and was glad to get it, since the home builder “bought it down” 2%. Once you’ve truly tasted the results of progressive economic policies, you never get the foul taste out of your mouth.

      We can never spare this man, Donald Trump, …he fights.

      Liked by 7 people

  8. grlangworth says:

    Interesting times minuet into view for the Chinese. Let’s wait a little longer. Just a little longer. Why not a little longer? Counting up those thousand cuts.

    Liked by 2 people

  9. I Hear You Now says:

    Liked by 7 people

    • JC says:

      Perfect response, perfect, Mr. President. No let-up, and he’s doing absolutely everything for American citizens. For us. You’d think I’d be acclimated to it by now, but I’m gobsmacked every time.

      Thank you for your excellent explanation, SD, AGAIN. That’s what it takes to educate those of us not as well-versed in international economics, and it allows us to share coherent info with others.

      Liked by 2 people

  10. Imagine what will happen when the world’s mightiest economy re-discovers its birthright?

    Liked by 7 people

    • woodstuff says:

      My mother (born in ’22) worked on the B-24 at Consolidated in Ft. Worth. Throughout my life, she would occasionally talk proudly about those times. I had the pleasure of taking her on a tour of a Confederate Air Force restored B-24, where she got to take a tour of a completed plane for the first time. Working on the planes was her “lifetime achievement” and she was always so proud of it, and rightfully so.

      Liked by 3 people

  11. Dances with Wolverines says:

    American politicians have forced a successful capitalist country, America, to be exploited for far too long to subsidize and prop up failing socialist countries.

    Liked by 6 people

    • vikingmom says:

      Exactly!! They keep saying that WE’RE the problem and their Socialist schemes will finally bring about “Utopia”…but yet, they have to steal from the American worker in order to prop up their failures while they, and their sycophants in the MSM, pretend that they are success stories!

      Stop peeing on our legs and telling us that it’s raining!!

      Liked by 6 people

    • Dekester says:

      Dances,

      Very true. Especially up here in Canada, where by and large we have had a great twenty or so years.

      Things have turned though, and those that didn’t plan are going to get f**ked.

      Gold is up ( priced in U.S.$). Our food costs are inching up, travel to the U.S. for our snowbirds is getting pricier. The Chinese are not pumping laundered cash into our inflated high end real estate market.

      Many savvy Canadians though have had U.S. bank accounts, and our equivalent of your 401ks allows something like 20% to be invested in U.S. stocks.

      Time for your working folks to reap some benefits, great to see that Blue Collared wages are up significantly.

      God bless PDJT

      Liked by 1 person

  12. Dutchman says:

    I note in this latest article by Sundance how many times he says “China and the EU”; and PDJT several times has included “EU” in his comments on WHO is and has been ‘ripping off’ the U.S. fir decades.
    Different situation, as we are not in a military alliance with China, never the less, on TRADE I see parralels.

    China can NOT ‘agree’ to a trade deal that creates a level playing field, and so will not. And PDJT’s approach to China is NOT to get such a deal; he knowsvits impossible.

    Similarly, the EU is utterly dependant, addicted to the $ they exfiltrate from the U.S. through ‘unfair trade practuces’ as,well as consistent failure to live up to their NATO funding obligations.

    Take these away, and the EU can no longer afford to pay for their generous social programs, even before you add in the severe burdens resulting from taking in 10’s of millions of ‘refugees’ from Africa and ME.

    EU is Conmunism, by a different name.
    Centralised, heavy tax and regulation, no accountability, what else would you call it?

    And,Conmunism stops working when you run out of other peoples money.
    I suspect after 2020, PDJT will begin to tarif EU, ostensibly to put pressure on them to agree to a ‘deal’ where they stop ‘ripping us off’; again they can’t agree to such a deal, any more than China can.

    Tariffs, as a way to ‘claw back’ the $ China and EU have been stealing from us, is a beautiful thing. As a way to bring back jobs, its glorious.
    As a way to reverse the worldwide descent into Conmunism, its sublime.

    Economic Securitu is National Security
    Or, “paybacks a biotch!”
    Either way, I haven’t had this much fun since I stopped using drugs!

    Liked by 8 people

    • Ever-expanding examples of President Trump’s “Strategic Intent” begin to look like he’s taking the world through a Book of Revelations 2.0, producing a GREAT AWAKENING to both our Existential Threats and Sustainable Solutions for confronting them.

      [See IMPLICATIONS post below.]

      Liked by 1 person

      • Dutchman says:

        BKR,
        I have had my own revelation recently, another head slapping D’OH! moment.
        There can be no trade deal with EU, for same reason there can be no deal with China.
        EU can’t function if playing on level field; how would they pay for all those generous pensions, health plans, etc. if not stealing from U.S.?

        So same path for EU as for europe.
        Regime change through bankruptcy.
        Economic Security is National Security
        FUGM

        Liked by 1 person

        • I was picking up on your examples of Strategic Intent, Dutchman.

          POTUS looks to be making Socialism and Communism UNSUSTAINABLE, along with RADICAL ISLAM and TERRORISM, both Domestic and Foreign.

          Then he’s making International Trade without RECIPROCITY obsolete.

          He’s also ending TRAFFICKING of Drugs, Women and Children, not to mention Illegals in general.

          But wait, there’s more …

          He’s TAKING the MONEY out of Politics, to restore the “public trust” that the M$M loves to cite but never will never uphold or enforce.

          Liked by 1 person

          • Dutchman says:

            Yup. Remember he met with Nancy, on infrastructure? She THOUGHT she ‘rolled’ him.
            Pelosi: We should up the amount of $, from 1 to 2 trillion, over 10 years.

            Potus: Sounds right, o.k.

            Pelosi: (yeah, I suckered him into that!) And why don’t YOU determine how we are going to pay for it? Increase taxes, offsets whatever.
            We can meet in say,….two weeks to discuss?
            POTUS: Sounds about right, o.k.
            Pelosi: Ha! I GOT him! He’s gonna HAVE to raise taxes!

            His answer of coarse is one word;
            TARIFFS
            Do not have to raise taxes on Americans, or reduce (Defence) spending.
            If China can build ghost,cities and bullet trains everywhere, we take back that,money we can build really good infrastructure.
            Notice Nancy didn’t make deal? She saw the trap, backed off.
            DRAT you, Trump.
            My theory,…

            Like

  13. Beau Geste says:

    “conventional wisdom” is that when dems are in power in DC, the Fed opens the spigots and there is enormous deficit spending – when the repubs come in and tend to reinvigorate the economy by reducing regulations, taxes, etc, after the dems crash the bank, the Fed tightens the spigot, the economy slows, so the dems get re-elected.

    PDJT wants to prevent this tendency of the Fed to rely on more polite (less screaming/threatening than dems) GOP governance to re-equilibrate the economy from gluttony. He has at least achieved stopping further tightening, and provided a little leeway to finance necessary pullback from china, which is his goal. We want to finance strong economies in all countries around China.

    He has at least partially stopped the Fed from assisting a dem election in 2020 by continued tightening.

    Liked by 3 people

  14. Roger Thornhill says:

    Wednesday, didn’t Joe DiGenova say “the Comey memos will be released Wednesday”?
    Did he mean “this Wednesday”?

    Like

    • sarasotosfan says:

      I was hoping we would get the first wave before tonight’s debate. I imagined the turmoil that could create for certain people and the media.

      Like

  15. Lower rates keep the flow of money into the stock market open since that’s the only way to get any profit, almost all of it going to the 1%; meanwhile the middle class continues to get almost nothing for saving any extra cash they have.

    Liked by 1 person

    • Tom! says:

      Interesting comment with which I agree. The problem I have is reconciling the Wall Street vs Main Street tension that seems to exist. Also massive deficit spending, acting as a stimulus for the economy, cannot be maintained.

      I don’t know what year is the point of no return where our interest payments exceed our ability to pay, but there is no doubt that we’re approaching it very quickly.

      Liked by 1 person

    • Arrest Soros says:

      @alryr
      At last, someone who gets it.
      Weakening ones currency is never a good idea. Look at all the shitholes around the World. Their currencies are ALWAYS low and getting lower. Venezuela, Zimbabwe, Indonesia etc etc.
      In a strong economy with strong laws, money saved is used to invest in businesses that make and sell things, creating jobs. But if interest rates are lowered nearing zero, then speculators take over and invest BORROWED MONEY in the stock market and the zillions of derivatives on offer. NOTHING GETS BUILT, NOTHING GETS MADE, NO JOBS CREATED.
      People who’ve saved all their lives get ripped off. Young people have no incentive to save. Everybody lives on borrowed money because borrowed money is so cheap. Debt skyrockets and makes it impossible to raise interest rates to fair and reasonable rates.

      Liked by 2 people

  16. GW says:

    Trump’s reelection is CRITICAL !
    The worry is how the anti Trump forces plan to cheat……….

    Like

  17. JackB says:

    Sundance has an excellent analysis on the real economy in this post. However he didn’t cover the financial economy in detail.

    As we know over the past 40 years we’ve financialized the US economy and the global economy as well. Since the mortgage credit crisis of 2008, we’ve added more debt than nominal GDP globally, with global debt 320% of global GDP. Even in the US debt is higher today than it was in 2008, primarily driven by corporate debt. Financialization leads to financial engineering not Capex. Companies have spent more money on stock buybacks than on Capex as it increases earnings per share without having to risk Capex to increase production or introduce new products. Most of these stock buybacks have been based on borrowing money and leveraging the balance sheet. Lower rates and easy monetary policy means companies can borrow cheaply to buyback stock.

    The Fed and central banks in general are focused on the financial economy and not the real economy. They have to keep easy monetary policies because of the need to keep financial assets inflated. Note that the bottom 50% of people in the US own 1% of the financial assets.

    Currently there is a significant manufacturing slow down in Asia and Europe. So the real economy is slowing there. It will feed into the real economy here too. This can be seen in the deceleration of auto, semiconductor and freight sales. This is not the real issue however.

    That has to do with the financial economy. One problem with ZIRP/NIRP is it screws bank profitability as their net interest income shrinks relative to operating expenses. If you look at the stock price charts of EU and Japanese bank stocks they have fallen off a cliff. One of the knockon effects is that these banks in search of yields have moved to increasingly riskier assets like junk bonds and CLOs. But as losses increase a point may arrive when they’ll have to substantially reduce the size of their balance sheet reducing credit availability to those weak zombie businesses who are heavily indebted and need to keep rolling over their debt. Another issue is that there are a lot of dollar liabilities in China and in emerging markets. With the US government increasing the scale of its borrowings substantially with trillion plus dollar debt increases annually the demand for dollars is increasing. This is one of the reasons for dollar relative strength as the demand for dollars globally rise. This is why central banks around the world are trapped and cannot exit.

    The financial economy is where the problems are as it is where the leverage is and it’s size dwarfs the real economy. 2008 is an example of the financial economy catching the flu.

    Like

    • Tom! says:

      How does it end? Worldwide we seem to have passed the point of paying back the debt and are quickly approaching the inability to pay the interest. This, in my mind, is not going to end well.

      Like

  18. QBOB says:

    I heard China is working on striking deals with the ASEAN partners. In this way they have a backdoor of sorts to the US markets to evade the tariffs. Waiting out the next US election in hopes of new POTUS. Probably financing dem candidate?

    Like

  19. L4grasshopper says:

    I’m of the opinion that even if the rate should not have been increased back in December, the FED should have left it alone now.

    The FED is too much of a busybody. They think that the MUST do something all the time. Now is a time when they should just leave things along and go on vacation. If and when we actually have a recession [OK, it’s WHEN — nothing lasts forever] they will rue the day that they spend a couple of their rate bullets now.

    Like

  20. billrla says:

    Today’s Fed move is tomorrow’s noise.

    Like

  21. gsonFIT says:

    Late 70s early 80s elite Ivy League B schools came up with the term “maximizing shareholder value”. This is basically an elastic clause for CEOs to faocus on stock price and everything else be damned. Rates were high and we were at the cusp of Global Markets not just for goods and services but investments too. Wall Street conned America out of their pensions and retirement plans and into 401ks. Mutual funds and falling interest rates brought Wall Street to Main Street.

    I am not going into everything but Glass Stegal was repealed, stocks could be shorted on a down tick, hedge funds pay 15% tax and Corps issue dilutive stock option to overly compensate under performing principals and execes.

    With all that said there is not a better place to invest your money than The.United States of America and on Wall Street.

    Part 2 (briefly). The fed has a dual mandate from congress. Full employment and low inflation. They work to control these by raising and lowering interest rates. Buying and selling bonds and moral suasion or just suasion (jawboning). No where is there a mandate to manipulate stocks prices or to back stop them (the Fed Put) but ever since Greenspan Wall Street has the Fed by the short hairs. Today’s sell off was the “they” of Wall Street telling Powell what do you mean this is not the start of a long term trend to lower rates.

    One final item there is a stock price discrepancy of the 10 largest stocks in the S&P and within that 10 mostly FANG stocks. These stocks accounted for about 45% of the markets return last year.
    But I promise and I am not being facetious Wall Street really is the best place to invest

    Liked by 2 people

  22. Mike Murray says:

    My guy! So glad I voted. Even when they said he couldn’t win. I’m in Illinois so I knew that was a forgone conclusion. But I am elated that I supported him. If we had a Republican party in Illinois that was any different from the democrats this state would be so much better.

    Maybe the President can start calling out our Senators and congressmen/women for being the scumbags they are. But it’s Illinois. A failed state. Probably won’t matter.

    Liked by 3 people

  23. Michael Osmon says:

    I feel guilty for getting such joy out of learning about China’s demise

    Like

  24. saywhat64 says:

    What does matter is the curtailing of the current quantitative tightening. The Feds balance sheet is still around 4 Trillion $. Much of that money has been used to buy treasuries, bonds, stocks and other equities which will need to be sold through the quantitative tightening process…

    Like

  25. Payday says:

    Where? The China exodus will benefit North America (USMCA) and those ASEAN nations who have partnered with Trump and made proactive trade agreements. That’s where the capital investment will flow.

    But will USMCA ever be signed?

    Liked by 1 person

    • jrapdx says:

      Seems that it’s waiting on Canada to confirm. Prevailing opinions are Trudeau isn’t favoring it, but when he loses the election in October Canada will go ahead and ratify, and that puts pressure on our shiftless Congress to do the same. If Trudeau wins reelection it may get delayed, but with their economy suffering (reflection of China/EU downturn?) they’ll probably move on USMCA for its potential benefit.

      Like

  26. Hmmm... says:

    President Trump’s spat with the Fed is really intriguing. One the one hand he has consistently promoted those who favor hard money yet he is jawboning them to lower rates. Add to the mix that the Fed is hyper sensitive about being perceived as independent so would be really reticent about appearing to follow President Trump’s demands. It’s a really strange mix of conflicting data points that makes it hard to know what exactly he would like to see happen. Jawboning the Fed is probably not a great tactic to get them to do what you want and it conflicts with his hard money team but it has proven unwise to doubt he intends something different than what he says directly.

    One other possible reason for the push for a rate decrease is its affect on China. Whereas it may not have a big impact in the USA the financial commentators on China that I’ve learned to trust believe that it will have a very large impact there. They need a rate cut badly. They need the dollars. Some of the analysis puts it at a critical level where if there was no rate cut it could cause severe damage to their economy. Over the medium term the Chinese would see benefits from dollar strength but short term they need cheaper dollars. A 50 basis point cut was seen as necessary. They only cut 25 points. And the trade talks fell apart. My guess is that these are related and that is why President Trump was pushing for the 50 basis point cut.

    Why would President Trump want to push for what the Chinese need? Well it’s hard to cut a deal with a dead guy. Pressure is great for a deal but you always have to present a way out. If they have a full blown banking crisis then a trade deal is not going to cure it overnight.

    Like

  27. spoogels says:

    After the Dem debate yesterday Trump is THE most MODERATE

    We dare not let the DemScum commies win in 2020

    https://thefederalist.com/2019/07/31/donald-trump-the-moderate/

    Like

  28. Graham Pink says:

    Lots of ifs in this scenario.

    Like

  29. IMPLICATIONS:
    POTUS has set the Fed up to prove itself an ENEMY of the STATE that is RIPPING the USA OFF.

    • The Fed has FAILED to neuter the China & EU Currency Manipulation that disadvantages the USA, magnifying our Trade Deficit, suffocating our Reindustrialization and stifling the Job-and-Wage Growth needed to pull SIDELINED and POVERTY-AFFLICTED American Workers OUT of the Snares of Socialism and INTO Self-Sufficiency.

    • POTUS can now execute a POLITICAL TRIFECTA to Make America Greater Again by EXPANDING TARIFFS (raising Demand-for-Workers), DEPORTING ILLEGALS (cutting Supply-of-Workers) and FINGERING the FED (transferring all the political heat for the 2020 Election Season).

    • He can STRETCH EXECUTION out for the next SIX YEARS, raising ESCALATING TARIFF INCOME until we’ve REPAID the FEDERAL DEBT.

    • He can use Tariff Receipts to FUND FURTHER TAX CUTS to SUSTAINABLY position America as the “Most Hospitable Economic Environment for Investment on the Planet”.

    • And he can REFORM the FED to replace its TRAITOROUS “INDEPENDENCE” with ACCOUNTABILITY-with-CONSEQUENCES for Future Failures (e.g., require every member of the Fed to place ALL Personal-Family Assets in a BLIND TRUST invested ENTIRELY in the Wiltshire 5000 Index). 😎

    RE: “Because the Fed cannot influence prices of manufactured goods, the Fed cannot influence inflation. The U.S. worker wage rates are stronger than any inflation; again the disconnect that CTH has noted for three years that will work in favor of the middle-class.”

    “So long as the Fed is pegged to Wall Street, meaning has primary focus on lending to U.S. manufacturing multinationals; and as long as that lending (investment) is stalled pending the outcome of Trump’s trade and economic reset; the Fed is essentially irrelevant on the bigger dynamic.”

    Liked by 2 people

  30. Kudos again, Sundance, for your ever-increasing clarity of insight!

    Liked by 1 person

  31. Kaco says:

    I don’t know, but I just recently came across this article that is concerning. From what I understand, none of our money is backed by anything tangible.

    JPMorgan: We Believe The Dollar Could Lose Its Status As World’s Reserve Currency

    “Almost eight year ago, we first presented a chart first created by JPMorgan’s Michael Cembalest, which showed very simply and vividly that reserve currencies don’t last forever, and that in the not too distant future, the US Dollar would also lose its status as the world’s most important currency, since it is never different this time.”

    ,More here:
    https://www.zerohedge.com/news/2019-07-23/jpmorgan-we-believe-dollar-could-lose-its-status-worlds-reserve-currency?fbclid=IwAR0KgNTqy5m1f4kEw5bD7bXSk1afK6qKbi1JqlP1TghEnHf5f0iBQqH3Ok8

    Also, saw the post about China. I’ve been thinking that ever since the dossier and the onset of the Special Counsel. The whole mess makes POTUS look weak to world leaders. Boy, we better see some heads roll just for this aspect, too. All the stalling, trying to wait POTUS out.

    Liked by 1 person

  32. Big Jake says:

    The Dims will not pass USMCA.

    Like

  33. Moe Grimm says:

    first of all there is no, read zero constitutional basis for the “federal reserve” to exist at all. They’ve wrought havoc upon this Country since Koch brother like ilk met on Jekyll Island off the GA. coast in 1910 to draft, then effect, its existence. https://www.youtube.com/watch?v=j282JKnmeVo. If you watch this and VERIFY what’s presented, do the names sound familiar? Ask the average ‘Merkin Dope laying claim to the right to Vote if they’re aware of any of this. What’s been loosed in our Country… and for far too long, is hopefully closing on a most full reckoning which I thank PDT among much more for accelerating. Hopefully it’s not too late. Not for my wife and I, but for our boys and as we await the birth of our first Grandchild. For those of you with kids as well.

    Like

    • Kaco says:

      I will watch that video, too. I had recently bookmarked this one I had come across as well, it is much longer, though.

      Here’s a quote from someone I came across recently, I don’t know if it came from an article or their own words. I’m not an economy expert, but found it interesting enough and if someone would wish to interpret.

      “The Roman Empire and consequences of currency devaluations (money printing):

      The Roman Empire was founded in 27BC and was dissolved in 1453. The Roman Empire was a big powerful nation that expanded throughout the Mediterranean Sea, North Africa and West Asia. The reason it was able to expand was because of its ability to expand its currency, the Denarius. It was used to pay for military campaigns.

      The consequences of expanding militarily was the devaluing of their currency. In these times coins were made of silver and gold. In order to create enough currency to spread throughout, the Romans had to begin to cut (print) coins. This meant putting less and less silver in each coin. By the time Rome fell, the Denarius only had 5% silver in them. When the rest of the territory’s figured out they were getting less value, they began reject the Denarius as money.

      This is what is happening to the US dollar around the world. When former president Nixon temporarily took the dollar off the gold standard, he in essence cut the dollars value. The reason he did this in 1971 was so the US could expand and pay for war in Vietnam. The world realized the US was printing dollars (cut coins) to fund war, but was not keeping up with the gold to back those dollars, so that’s why Nixon temporarily suspended the convertibly of dollars for gold.

      History repeats itself when the people don’t know their history.”

      Liked by 1 person

  34. Zippy says:

    The “experts” at the Fed and IMF are actually clueless because, as I and others have pointed out, they use simplistic garbage economic theories to develop simplistic garbage economic computer models fed with politically manipulated and, therefore, garbage data at FAR too few sample data points for such an incredibly complex chaotic system with an added variable that’s extremely difficult to define: human nature and illogical action. Don’t trust them any more than you do politicians. If you haven’t watched “The Big Short” then please do so! If you have, watch it again.

    This is just a small sample of their “projections”:

    Like

  35. ontoiran says:

    no effect on main street? i’d like to get some return on my 40 years of savings without putting the whole nut in the sideshow market

    Like

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