We believe the real fear in the halls of the Fed is not that Trump moves to take over the Fed. Rather, the fear might be that Trump moves to take more control over the Fed and the markets rally in approval.
Today's topics include the market's reaction the Fed, all eyes on the Fed, how Trump's policies have influenced the Fed, zombie companies, Judy Shelton's advice on exchange rates, trade talks and the British pound.
Yesterday, CNBC's Steve Liesman relayed some interesting concerns from inside the walls of the Federal Reserve.
Now that roughly half of S&P 500 companies have reported, Q2 2019 earnings growth has bounced back to 0.17%. However, Q3 2019 and full-year estimates continue to fall.
Today's topics include Dudley and Yellen's rate cut endorsement, what to look for in the Fed statement, why the Fed may be more divided than usual, the confusing Federal Reserve, hedging costs continue to fall for foreign investors seeking U.S. debt, Federal borrowing soars, the British pound and mortgage rates at their lowest since 2016.
The Fed has not clearly articulated a reason for cutting rates. They now seem to be focusing on weak global growth, something that rarely topped their discussions. Powell needs to explain why they are cutting rates Wednesday, otherwise the conclusion is the markets are driving Fed policy.
U.S. interest rates, particularly at the short end of the curve, are the highest in the developed world. We believe the markets see the inverted 3m/10y yield curve as a reason for the Fed to cut rates. If the desired outcome is an uninverted curve, the Fed should cut as much as is necessary to bring the short end of the curve markedly lower than the long end.
Today's topics include inflation and the Fed, timing the rate cuts, balance sheet reductions, economic indicators, the handful of stocks that provide returns, using AI to analyze earnings calls, negative rates, reaching for yield, a preview of the Treasury's refunding announcement and tracking the odds of the Fed nominees.
A proxy for the future of electronic and algorithmic trading is MarketAxess and Tradeweb. These stocks are booming like no other stocks in the financial sector. Will the entire bond market be reduced to a platform run off a phone app? These companies are trying.