The compelling case for 50 and why the Fed won't do itFirstly, probably shouldn't make these calls as it has a way of blowing up in your face. There is a very strong argument for why the Fed should cut 50 bips tomorrow, won't bore you with what you already know. The reason they won't, is actually quite simple. Because they don't have to. Farily basic. Are we softening, yep, is emloyment finally coming in, yep, most importantly is inflation on target and almost there, another yep. The economy while softening is still doing ok, retail sales (which was probably the nail in the coffin today) showed the consumer still spending (what money I have no idea), earnings are still decent and guidence for all intents and purposes is also still decent. This clearly shows things are not falling apart. Yes we are a long way from nuetral, no doubt, they will endeavor to close that gap starting tomorrow, but it won't (at this juncture) be by 50, it will be by 25. How the market reacts to this is anybodys guess. I unexpectadly added some shares to my APR reit today and will be ready over the next few weeks to be opportunistic.
With regards to the incessant whining yet again today and the "unprecedented" sell off, and the "it makes no sense" commentary yadayada...................not sure what needs to happen to shut some people up. We have seen upwards of a 30-40 percent move in a very very short period of time. This from a sector that is an investment, a longer term investment at that. This move easily equates to a one plus year move and it happened in a few months. To give back a few pennies into a significant news event, like are we serious here?? In fact, if anything, again, we showed strength into the close. A number of my reits closed up today, AGAIN. It is beyond mind boggling how absolutely stupid some people can be. If stocks don't go up every single day in a straight line non stop, the world is coming to an end. I am hopeful of at least a 3-5 percent drawdown so I can reload, but thats just me.
In any event, will make for an interesting day tomorrow. The rate announcement will likely cause a knee jerk, the presser will be what to watch. I'm ready, which is more than I can say for at least one other member of this board. Good luck everyone, happy trading tomorrow.
DZ