I have all my assets tied to the market - so, thank you, FED - I am enjoying the ride and plus some more.
But I fail to understand this exuberance solely tied to interest rates.
I think the American economy and consumers are really the reason why this market should even be higher.
Nothing is a better palliative for the market than American consumer.
So, if for some reason, the FED rate helps consumers so much the better.
I spent 43 years in the oil patch.
In all our annual budgeting process - we were always cautioned to pay no attention to oil prices of today.
We always invested for the long term. Our investment horizon was at least a decade if not longer.
Something similar here for all investors in the stock market.
Longer you stay and stay calm - better for you.
5
Trump’s jawboning did the job. I am wealthier than I have ever been and pay less in taxes.
3
Tax cuts for the rich moves money from business operations that make accrual profits into markets, she the bid up the price of already existing assets. It creates bubbles that pop and destabilize the economy .
Supply Side Economics never works as advertised, and always does damage to the economy.
Gogole annual GDP growth and average the decades. Since Supply Side became the diminishing economic model growth is down. Growth was higher during the stagflation of the 1970s.
2
Thanks to the Fed? You mean thanks to Trump, who has been roundly criticized in these pages for "politicizing" the central bank to be more in line with his economic policies. Just today. Paul Krugman decrys the "Trumpification" of the Fed. But its working, isnt it? A federal reserve that works against the president's efforts to expand the economy is insanity. Previous presidents hand-off policy only undermined their stimulus efforts and hurt the American worker. Inflations at a historic low, as is unemployment, and wage growth finally means something.
2
The stock market is a rigged scam. Much like the economy it does not reflect.
8
Exactly. That is why the CD market is the way to go.
2
Our bellowing president has seriously jeopardized the so-called independence of the Fed. Nothing like giving tax cuts to the rich, thus "juicing" the economy with no benefits to the non-rich, and good luck when we inevitably slide into recession. The average, working person has no margin, despite all this "great" economic news, and can barely scrape by - thanks to Wall Street, not Main Street - being bailed out in the Great Recession.
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The comment section is resembling the negativity and hate of Twitter here. I suspect many commenters have little technical knowledge of how economies function, especially given how much credit is being given to the presidents. What goes up always comes down.
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But it was my understanding that only Obama could cause the blind to see and stocks to rise. Who is this Fed?
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Hmmmm ... the stock market appears to go up only on the promise of cheap money - the market's ability to take on debt.
'Scuse me ... am I the only one who thinks this isn't particularly healthy?
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@Steve
Your premise isn’t true.
The Fed increases 8 times between December 2016 and December 2018. The market went up anyway.
6
Should read, "thanks to Trump's economy".
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Amazing! An entire positive article on the economy, and not one word about Trump.
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More market manipulation by the Bankrupter in Chief. Buying off everyone while he destroys our democracy.
3
We are living in a disaster of economy and the collapse is going to hit hard but the times refuses to do real reporting.
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@Steve I think that’s what Krugman predicted had already happened the day Trump was elected.
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@TR88 We supposedly have full employment, we supposedly have a great economy but this is the GOP playbook...... Blow up the deficit and make everyone else clean it up. When you cut taxes for the wealthy and corporations you lose all of that tax revenue. I’ll admit that it helps me but it destroys the working class. Understand that wealth is concentrated in a very small percentage of the population. Understand that the stock market is meaningless to the majority people. Understand that if we cut the interest rate now we will be out of tools when the recession hits. Understand that I’ll be okay because I am the 1% but also understand that what’s about to go down is going to be a disaster. He’s a snake oil salesman from NYC and you are all going to be stuck with a ton of snake oil.
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@Steve
I don’t understand.
The agony of watching Democrats watching the market rise is almost too much to bear.
13
Did Federal Reserve Chairman Jerome Powell just bend and break before the threats of American Tyrant Dictator wannabe- in-Chief?
Is anybody in the Trump Administration working on behalf of the best interests and values of the American people while preserving, protecting and defending the Constitution of the United States of America?
Or is everyone in the Trump Administration working for the profitable advantage of the Trump Organization and smiling and smirking Benjamin Netanyahu and Vladimir Putin and the useful idiots at Facebook, Twitter, Google, YouTube, Amazon, Apple etc.?
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@Blackmamba
You don’t seem very happy that the market closed at the highest level in history.
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@TR88
You don't seem to care that most Americans work for their money instead of having their money work for them.
You don't seem to understand the America is a nation state instead of a business.
You don't seem to understand that the President of the United States is the head of government/state instead of a businessman.
You don't seem to know that Donald Trump inherited his real estate 'business' and played a businessman on reality TV while losing more money than any American businessman over a ten year period.
7
The dollar weakened and the market rose, value overall remains the same for me living in Japan (or in the rest of the world). Everything is relative, just moving deck chairs around on the Titanic (or cash from here to there). Our one saving grace was the coordination of central banks around the world. The current political environment has changed that dynamic. We live in interesting times.
2
Another victory for Trump. He keeps increasing my family’s net worth. Thank you.
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@Shamrock
Your net worth includes the value other countries put on this country, always has been and more so in this era. That long game is being lost. Many new trade alliances are choosing to no use the dollar, that huge resource benefiting the US is depreciating, rapidly. Declining nations can coast for a while on leveraged assets, growing debt and easy credit. Yes, Its another party with a very limited invitation list. Enjoy the party, but, eventually, please vote to pay for it- soon..
5
The next bubble is the value of the dollar.
6
I suspect this won't come to a good end. Maybe an autumn crash? Does 2019 rhyme with 1929?
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You can make a fortune with that information if you’re willing to put your money behind it.
8
There is so little room for rate cuts, we will be in serious trouble if/when there is a recession. Room for cuts saved our bacon in 2008. Not so lucky this time.
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@Steve Mills
It doesn’t seem to worry Europe or Japan.
2
OMG growth is slowing so let's do the one thing that will slow growth even further! Think about it this way, if you were contemplating taking out a loan to buy a house, car, or equipment for your business but you expect lower interest rates in the coming months, why wouldn't you put off that purchase (if you can) until rates are lower? If enough people do this, you would expect that this would exasperate already slowing growth. It's a self fulfilling prophecy.
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@Erik
Lower rates stimulate rather than slow the economy. That’s why they lower them in a recession.
Your point about delaying purchases would be a good one if the market hadn’t gotten ahead of the Fed and already lowered.
There is also no guarantee the Fed will ease.
1
@TR88
Does the Fed lower rates in recessions or before
recessions?
1
@Erik
Both.
Even Federal Reserve is caving in to Trump's bashing and feel they need to help him re-elected.
Fed still is holding a few trillion dollars of mortgages and Treasury bonds, how much more does it intend to buy and hold? The biggest holder of U.S. Treasury is now Federal Reserve and Social Security fund, what happens when U.S. government can not pay interest if the debt ceiling is not raised in September?
We punt, I guess..or go to Mars-A-Largo play golf and pretend nothing happens?
7
@paul the Fed is not buying and holding bonds. They are selling them at the rate of 50 billion a month since last September.
3
Money chasing money in "markets" that no longer have much relation to investment in productive capacity or workers' salaries and wages is not so much a news section as sporting pages for the filthy rich who already have more than they could possibly spend in their lifetimes.
15
@RRI: Yes. This market is ripe for a fall. Complacency has set in, not the least reason being there have been so many serious post-2008 market drops which have immediately been followed by complete recoveries.
1
@traveling wilbury
The odds are stacked against you if you think the Fed is going to start an easing cycle as looks certain.
Don’t fight the Fed is the number 1rule of investing in the market.
I think it’s important to note the Fed has increased 8 times since Trump was elected after an unprecedented 10 years with a single quarter point increase in December 2015.
Additionally, The Fed is getting rid of the 4.5 trillion in bonds in QE bought at the rate of 50 Billion a month.
After the widespread predictions that Trumps election crash the markets and the economy, he’s doing a great job in the face of relatively tighter Fed policy.
That turned out to be Fake News meant to tip the election.
6
And if the fed doesn't lower rates? How will the markets take that information? Hot money does too much Fed watching.
3
@OneView
Not well unless there is evidence the economy is accelerating
1
Please tell us how this helps those who work for a living
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@Adam Stoler
They want to extend the economic expansion and avoid a recession which will cost a lot of people their jobs. Maybe yours.
If you’re in the market for a loan, you’ll pay less in interest.
If you work for a private company I would assume they borrow money. Lower rates will benefit them which could result in a better chance for a bigger increase in your pay and benefits.
3
@Adam Stoler
Nada, lowering rates does not create jobs, nor does the company give you a raise.
Economists like to trumpet the benefits of lower rates, through some twisted logic, will create jobs. But business hire people in response to higher demands from customers for their products.
Lowering interest rates means borrowers will pay less but savers will earn less too. Hence, saying that lower rates will generate demands for goods and services is not a sure thing (like apple falling from the tree), is it?
That's why Fed and the fellow economists want to convince you that it is true, otherwise why would you need to pay them?
Economics is not a science, it is a bunch of theories based on some common "human assumptions". That is why it works sometimes but often times not.
5
@Adam Stoler It doesn't, it's a response to slowing growth around the world. The Fed works on macro issues.
3
Running out of bubbles Paul Krugman , 2005
(Thank you Paul Krugman)
"In July 2001, Paul McCulley, predicted that the Federal Reserve would simply replace one bubble [The dot com bubble that collapsed in 200 with another. "There is room," he wrote, "for the Fed to create a bubble in housing prices, if necessary, to sustain American hedonism. And I think the Fed has the will to do so, even though political correctness would demand that Mr. Greenspan deny any such thing."
Now the question is what can replace the housing bubble.
So what happens if the housing bubble bursts? It will be the same thing all over again, unless the Fed can find something to take its place. And it's hard to imagine what that might be. "
https://www.nytimes.com/2005/05/27/opinion/running-out-of-bubbles.html
Paul underestimated the imagination of the Federal Reserve's monetary economists. They invented ZIRP and QE, printed $ 3 Trillion of new money, blowing the largest asset bubble in history
It too, will come to a nasty end
15
@Woof: The too-strong US Dollar vs. take your pick is a huge bubble.
So who's in charge? The Fed or the President?
4
The Fed is not supposed to compensate for mistakes in trade policy made by Trump.They are supposed to be independent and have been for years.Now Trump bullies the Fed into lowering interest rates which he knows will “juice” the market.Trumps monetary policy is irresponsible-adding a trillion dollars of debt to give the rich a tax cut and starting trade wars to threaten countries if they do not bend to his demands.Let’s remember that he managed to have five bankruptcies-the Fed should totally ignore this money-mismanaged!
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@JANET MICHAEL
The Congress does fiscal, not monetary policy.
The Obama Administration averaged $trillion deficits for all 8 years of his Administration and also benefitted from unprecedented stimulative monetary policy by the Fed plus 4.5 in QE.
1
@Pa-Do you remember that Obama took office four months after the Great Recession started?Fiscal stimulus was needed to keep the economy from falling into a deep depression.
12
@JANET MICHAEL
The recession ended in 2009.
The Fed tried an increase 6 years later, a single .25 in December 2015.
The market sold off and that was it. No more until December 2016, after the election.
1
At least for once market correlation was on the positive side.
1
If the Fed makes a move because of the trade war uncertainty that would create moral hazard. This and any future president would get the message that it can start trade wars with the knowledge that the Fed will render an assist and prop up the markets.
23