The Investment Thread

bclemms said
I think it's brilliant by the fed. They know what they're doing. They can't cut rates because inflation is still too high, too sticky and would come raging back. They also can't keep cranking rates up or even sitting still. Just whisper rate cuts to the market and let them do the heavy lifting fueling a mega rally while not having to actually cut rates. It doesn't solve the consumer debt problem or commercial real estate problem but it does allow inflation to come down while the economy chugs along. Problem is, at some point the markets are going to quit rallying to calls for rate cuts. I still think there has to be some pain for gain and there is no such thing as a truly soft landing but I've been wrong since the covid rally so might as well keep the streak going. lol

The narrative is that the market tanked because of Iran's threats to Israel. We got Putin threatening nukes and we've entered a hot cold war via proxy with Russia and the market shrugged that off so I don't buy the Israel/Iran thing even being a driving factor for the day. It's all about the Fed.

Makes good sense. It's definitely a balancing act and I can't really fault the Fed for any recent moves they've made. They've certainly been cautious and taking a go slow approach, which is ultimately probably the most prudent strategy.

I really think the markets understand there are headline risks with the instability in the ME and Eastern Europe, but I suspect most have said scree it, not waiting around and just do their usual investing strategy until they can't. I think it's why the markets have been up at record levels until recent weeks, and feels like some of the drops in the last 2 weeks are really more profit taking and asset rotation than anything else. The Fed easing off their rate cut plans probably has some impact but I actually think it's more to people making moves than even the Fed or global events. There's some but in the bigger picture, I think more repositioning assets than anything else.