MacroEdge 9/15 Weekly Ozone Report: Jumbo Cuts Mean Jumbo Problems. Vision Update, Discussion on Gold
In this MacroEdge Ozone Weekly Report and Deep Dive, the team discusses the implications of a 50bp cut, odds of a 25 or 50bp cut, provides an update on MacroEdge Vision, gold, and more. #MacroEdge
FOMC/BoJ Bonanza (@DonMiami3, MacroEdge Chief Economist)
Good Sunday evening MacroEdge readers and community,
Well, we’ve finally made it to this point - the very likely first rate cut of the cycle since the COVID pandemic and subsequent lockdowns resulted in the Fed rapidly lowering rates to zero. While that wasn’t much of a business cycle - we’re now staring down a true business cycle - with economic impacts seen from record monetary tightening in a short time. While there is still much speculation around ‘fiscal dominance’ - aka our runaway fiscal spending and out-of-control deficits - we think it provides an airbag for, but does not stop, the current business cycle. We’ll put more behind the implications of rate cuts in this evening's Weekly Ozone Research Report - looking at past instances of 25 and 50 basis point cuts - and how the economy performed in both hard and soft landing scenarios in both real estate and labor market terms - two of our largest core focus areas as the labor market continues to cool. We’ll also briefly
We continue to believe that because the fact that 50bp is now priced as the ‘more likely’ scenario - this would be an admittance by the Fed that something is going very wrong in the economy under the hood - which is what we have been discussing since last August, particularly as it pertains to both real estate and the employment markets. A 25bp rate cut start is not an acknowledgment of a soft landing either - given cycles like 1990 - but a 50bp acts as a signal that the data they are using to justify their decision is bleak and their outlook is weaker.
With that being said - this week our team is preparing for MacroEdge RESights, along with several other offerings as apart of our 2025 Roadmap, and we look forward to a very busy rest of the 2024 year with you all.
We’ll see you in the Ozone for more, and with that being said, let’s jump right in.
