Is the Fed easing interest rates because it thinks we AREN’T entering a recession???
Surprisingly, the market did well this week.
This is surprising, to me at least, because the Fed cut interest rates another 0.5% and the jobs report came in looking pretty bad.
The Fed did not cut interest rates this week because it thinks the economy is doing well. It especially wouldn’t have done so after dropping rates between meetings by 0.75% just last week.
The Fed is clearly signaling the economy is in serious trouble. So why is the market rallying on news the Fed thinks the economy is in serious trouble?
In addition, the job report today was simply awful. It showed the first monthly decline in jobs since the economy was slowly coming out of the last recession. Cause for celebration? Apparently so.
In my opinion, market participants are still digesting the market’s significant drop during January. They are also digesting recent economic news, government actions and election results.
The reality is that much more deck-clearing is required in the financial sector, credit markets and housing sector before the next bull market can really take off.
In the meantime, some excellent bargains can be found in select places in the market. Troubling times like this are a big opportunity to prepare for the next upswing, regardless of when or how it comes.
I’m seeing some of the best opportunities I’ve seen since 2003, and I think those opportunities will grow in number and size in the not-too-distant future.
Nothing in this blog should be considered investment, financial, tax, or legal advice. The opinions, estimates and projections contained herein are subject to change without notice. Information throughout this blog has been obtained from sources believed to be accurate and reliable, but such accuracy cannot be guaranteed.