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Originally Posted by ASAP
Exactly... that's the point, I am trying to make... this is a ploy just to help asset owners again. It's going to be interesting to see if that Port strike unfolds and if consumer prices go up again.
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There’s more to it, of course. The theory is that lowering interest rates makes business borrowing more cost effective, so expansion projects get funded. That implies hiring and supports wages. Mortgage rates dropping should result in more home sales, especially for new homes, helping builders and building suppliers.
Can’t ignore the political optics of the rate cut coming 6 weeks before Election Day (as if it was just a day anymore). I know the FED is supposed to be independent of politics, but it isn’t.
Port strike is tomorrow; if it is lengthy shortages and inflation will result. The longer it goes, the less transitory inflation will be. Rates will then have to go back up, and the economy will stagnate. The strike is a huge risk.
The impact on GDP of Helene will also matter, likely tick growth down for Q3 and maybe Q4. Recovery will help some, but again with a port strike recovery will be more expensive, slower and dampen the overall economic outcomes.