re: Fed cuts by a quarter point, indicates fewer reductions ahead

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1. Consumer debt/CCs
2. Residential RE
3. Commercial RE
4. Auto loans

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Residential RE triggered the 2008 Financial Crisis. Normal bank mortgage charge off rates are around 0.5%. In the subprime sector I believe the charge off rates reached 8% which collapse the mortgage back securities market and their derivatives.

So you're saying a little bit of all these sectors will coalesce into one and cause a market crash?

Or the chance to catch a falling knife.

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They are trying to get the economy to hold on just enough to pass the grenade to trump. My suspicion is that they won’t try another Covid. This time it will be catastrophic economic collapse. And they will blame it on trumps tariffs, even though this has been brewing since Bush.

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The American people are going to be very fortunate if inflation doesn't pick back up in the next couple of quarters as employment also plummets....real stagflation. Let's hope Team Trump has the economic gurus with the plan to avoid the nearly unavoidable financial and economic shite show that's likely coming.

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So you're saying a little bit of all these sectors will coalesce into one and cause a market crash?

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I'm not going to speak for SFP, but what I see is that GDP growth has relied more and more on growing consumer debt since 2022, putting us at the point where the last year-ish has had GDP grow being almost solely dependent on increasing consumer debt.

That debt has very high servicing cost, which isn't going to come down to any sort of manageable levels for the foreseeable future (outside of some sort of legislation).

As inflation outpaces wages and jobs continue to be shed, more and more of that consumer debt goes from delinquency to default. As more of this happens, the credit companies will try to come up with gimmicks and clever accounting to avoid it. Some might work, some won't.

As more of those consumers move into default, they lose an increasing amount of credit access. As more lose credit access, GDP slows. As GDP slows, more jobs are shed, creating a downward spiral until the economy resets. Considering the large debt load, that may well create enough turmoil to cause a deflationary period.

And that's where the bigger issue would come into play. The federal government's idea for resolving a recession is to throw money at it. By cutting rates too much and too early (before inflation was clearly under control), the money-throwing has started too early, so if they really get serious enough for successive cuts, it would likely create a stagflation environment.