Juy FOMC to inform market Sept rate cut?

Yup just in time. Magically the BLS headlines shows increases but unemployment is rising and the fed says this is what will cause a cut

4.2 was the number and we are at 4.1

History shows that when the Fed PIVOTS (not stops raising or simply sits static, but actually lowers rates), the economy collapses about 12-18 months later.

quote:

---

The cpi and ppi data will support a rate cut

At least that’s my expectation

Inflation is certainly taming

---

I continue to agree that cuts are very likely on the plate for September, but it's smoke and mirrors which obfuscates what else is going on.

We're still well above the money supply level of May 2020, much less January 2020, with both M1 & M2 seeming to have levelled off (for those new to the forum/discussion, the short-hand definition for inflation is that it's too much money chasing too few goods and services). For inflation to truly be tamed, prices have to have risen to the level where the devaluing of the currency now balances out. Considering the obscene amount of money crammed into the economy during COVID and how much has been created through increasing debt (with high interest rates), I don't think we're there yet.

Housing demand hasn't declined, it's merely sitting on the sidelines waiting for rate cuts before it drives home prices higher again. This will be the big resistance to inflation for any cuts as I think any rate cuts will create a disproportionate increase in home prices as more buyers jump back into the market.

Green policies continue to push up energy costs and pretty much everything takes energy to be made.

The pace of consumer debt creation has slowed, but still continues to climb while interest rates remain at levels ranging from "generationally high" to "historically high". Along with that, the federal government is still spending ridiculous amounts of deficit dollars while debt servicing is quickly moving towards being the single largest expense item of the federal government. To me, both are problems but the former is where the most immediate issue lies.

Continued claims have been rising (slowly but steadily) while Initial claims have also started to slowly rise (after both have remained relatively flat for the last couple of years). As such, Unemployment (if we can believe those and the jobs numbers... lulz) has finally made it over the 4% mark. What this seems to say is that more people are staying unemployed for longer (regardless of job numbers) while also that more people are becoming unemployed. This is where the problem with consumer debt comes in. If the increase in unemployment persists (and slowing GDP numbers would indicate it will), then that record high level of consumer debt at high and record-high servicing rates becomes more and more problematic.

In the past I've posted about rising consumer delinquencies and subsequent bankruptcy filings and my concern that if those rise too much in a short period, we could get into a recessionary scenario that could have a snowballing effect as so much of our GDP growth has been solely on the back of consumer debt creation. In other words, if consumers aren't able to keep creating enough debt to keep economic activity going, we pop the consumer debt bubble and get a monster recession strong enough to create deflation.

Avoiding this scenario is the needle I don't think JPow can thread.

Just as higher rates are hitting the corporate world

These guys are clowns

Powel has stated that if they wait too late to lower rates, it could damage growth.

He’s clearly got a cut in mind for September

The markets have that baked in