The rising sentiment towards a Fed rate cut seems premature—even for September 18th. Financial conditions are easier than they have been in two years. The S&P 500 is still up by 14.5% for the year (just below the Nasdaq’s 2024 return of 15.6%), but it sure doesn’t feel like it, even though it remains well above average returns over the last 15 years.
The Fed Won’t Cut Rates This Year. Most economists think they should. (Of course, they do! Most of them work for the government or on Wall Street.) But let’s face it, as calculated by the government, inflation for the average household is up 25% since it started rising in 2021. However, for most households, it feels much higher. The point is that inflation is not going to go down. The Fed doesn’t even want it to! Core PCE is rising at 3.5%, and it’s expected to rise to 4% by the election. The Fed’s stated target is +2%; inflation would have to be negative for a prolonged period to bring any relief to the average household.
“By all means, let’s be open-minded, but not so open-minded that our brains drop out.” Read More »
Let’s cut to the chase. It says the Fed has raised the Fed funds rate to 5.5%, and 10y Treasury yields are
unchanged.
50% of the Perry Capital portfolio is in the money market. The T-Bill position remains at 25% of portfolio assets.
Long Treasuries
and Bitcoin. Everything seems expensive.
“Everything we hear is an opinion, not a fact. Everything we see is a perspective…” Read More »
Markets are correct to be convinced that the Fed funds rate will be raised tomorrow by +0.75%, the
fourth such hike since June, and will bring the upper bound Fed funds rate to 4.00%; Any deviation
from trend, six days before the elections, will be deemed political.
“Even though the risk of doing too much is a recession, the risk of not…” Read More »