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Holy guacamole, a rate cut? But weren't we just talking about a rate hike?? A quick look at how we got here...

Mar 27, 2019

We Crunch the Numbers, You Make the Trade.We Crunch the Numbers, You Make the Trade.
We Crunch the Numbers, You Make the Trade.We Crunch the Numbers, You Make the Trade.

 

  • Last Wednesday the Fed took a considerably more dovish tone than expected when announcing its decision to hold rates steady, signaling no further rate cuts in 2019 amid cooling growth.
  • The Fed cut its GDP forecast for the US in 2019 to 2.1% from 2.3%, very likely a strong contributing factor in taking the more dovish tone

 

  • Growth outlook takes center stage and fear is in the air

 

  • Friday morning unexpectedly weak PMIs hit the tape. 
  • Then inventory growth data came well above expected, feeding the concern

 

  • Suddenly, scream of "Cut! Cut!" could be heard in the distance. 

 

  • Friday saw the US yield curve invert for the first time since 2007.  An inverted yield curve is classically a harbinger of recession.
  • This "fed" the flames of fear, and the VIX soared while stocks plunged.

 

  • Panic in the streets, fire and brimstone, cats and dogs living together!  

 

  • The calls of "Cut! Cut!" grew closer and closer.
  • Then they were right in our face, with President Trump's latest nominee for the Fed, Stephen Moore, calling for significant rates cuts, at least 50 basis points

 

  • Then, the yield curve returned to its normal upward slope

 

  • Whoa, whoa, say some Fed officials, take it easy there!
  • San Francisco Fed President Mary Daly said Tuesday, "I'm not freaked out" by the yield curve inversion.
  • Dallas Fed President President said today he'd need to see an extended period of yield curve inversion to consider rate cuts.

 

  • So despite the calls for cuts, the panic in the streets and the curious new living conditions of cats and dogs, it looks like rate cuts any time soon are not likely to be there case...

 

Global Top Stock IdeasTOP LONG & TOP SHORT STOCK IDEAS FOR GLOBAL MARKETSMONTHLY TOP IDEAS FROM OUR MULTI-FACTOR QUANTITATIVE MODELS
Global Top Stock IdeasTOP LONG & TOP SHORT STOCK IDEAS FOR GLOBAL MARKETSMONTHLY TOP IDEAS FROM OUR MULTI-FACTOR QUANTITATIVE MODELS