adp non-farm report just came out. Much higher non-farm employment than predicted. We are screwed in term of rate cut. High unemployment and high core inflation gave jpowell easy excuse for pause rate and wait and see.
We'll see what actually happens.
I mean... they printed money when COVID hit to keep the US spending.
If this sell off starts triggering massive buying of off shore stocks due to unease in US stocks... they gotta do something to keep investors in US stocks.
Not to be a doomsayer, but with rising inflation (again) due to tariffs, probable layoffs due to reduced demand on american goods due to tariffs and combine that with high interest to fight the self-induced inflation, people will default, a lot. Even domesctically produced goods will be hit with inflation due to potash tariffs.
I’m seeing in my unqualified crystal ball, a depression happening.
What the end goal if you print more money for a bail out just continue kicking the can down the road. It’s like we’re building a dam that gets weaker each renovation and gets more water behind it. The longer you keep repairing it with tape and sticks the bigger the flood will be when it collapses. Let pain hit when it is supposed to hit rather than pushing it to the next generation double
What's going to replace it, a BRICS currency? The Euro?
I'm not denying there's pressure on the Petro Dollar and there are strong efforts to create an alternative, but all those alternatives are laughable, even conaidering the upheaval at the moment.
Humans love creaming doom and gloom, but it almost never come to pass.
LOL, this has been the line for 30 years (since the 90s inflationary period). If you call for the fall of Rome every day for 600 years you'll eventually be right.
everyone said this during covid prints and then during post 2008 QE and by all accounts JPow was landing the plane in insane crosswinds and we were so close while coping with the pain after all of us pointed and said it was impossible.. then this happens.
Jpow was doing a great job it sucks that he doesn’t get to close his tenure the way it could have gone. If he pulled off the soft landing it would’ve been incredible. Now we’ll never know
What you are describing is called stagflation and from the massive global experiment that was the 70s oil crisis (cause by OPEC refusing to export oil, so not a bad comparison to now) the BEST way to handle it is thus:
The reserve bank handles the inflation
The government increases the safety nets
And the public get ready to be raped.
The nation's whose central bank and government ignoring inflation to keep people in jobs ended up having inflation accelerate to much, wages went backwards and since they still had no oil, unemployment STILL continued to rise.
So they achieved nothing but wasted money and made things worse.
The nation that ignored everything but inflation also faired poorly, but not as poorly.
The nations who saw that no amount of government money was going to stop a lack of oil from crushing the job market so instead focused on accepting the high unemployment and catching people as they fell did best.
It freed the central banks hand to do the bloody work that needed to be done and made sure the worst of the pain fell on those who still worked.
Now obviously the price hikes and supply issues will be caused by the tarriffs this time, instead of OPEC. But the outcome is the same. The reserve bank MUST follow what it learned in the 70s and if need be publically make it clear that the safety net is government responsibility.
That was nearly 20 years ago. There is no hard rebooting the economy. The entire economy is based around the federal government propping up loser businesses and insanely useless tech enterprises. There is no rebuilding this house of cards.
The government isn't propping up tech. Big Tech prints money to send to DC for DC to buy flyover state votes.
Everybody was all doom and gloom about tech when interest rates rose. No, Mag 7 became a thing and while non-tech companies stagnated you saw Apple bust past $3 trillion. Even in our "high" interest rate environment you see OpenAI reach $300 billion valuation without government nonsense like Farm Welfare.
The past 5 years has proven it. Interest rates up? Big Tech. Interest rates down? Big Tech.
It's not a computer you just restart and it works different. You have to actually have a coherent theory of macroeconomics that is supported by evidence in order to make good policy.
If they print more money dollar will nosedive. With these tariffs demand for USD will go down, add billions in quantitative easing and you are set for disaster.
Rising inflation due to tariffs leads to rate HIKES, if the goal was to cap inflation. Yeah we are going into a recession right now, one we caused on purpose, when our economy was in a delicate position and we had no room to absorb recovery measures.
This decision guarantees we are fucked. There is nothing left to do but watch it fall.
What potash tariffs are in place right now?
Canadian potash imports into the U.S. not covered by CUSMA are currently subject to 10 per cent tariffs and that is where they will remain for now.
pre-covid fed is very differently than post covid fed. Before we had international trade and immigrant labor to export inflation and labor cost despite a decade of money printing.
Right now that mechanism of reduce inflation via foreign supplier is gone. The labor cost reduction via immigrant labor is also gone.
There is no longer natural competition mechanism to keep inflation down from the supply side. The fed have open excuse to control inflation from the demand side.
I'm hoping for a dovish fed, but seeing how they are just borderline bureaucratic that can be replace by a machine. I wouldn't count on it. Get your put ready
Jpow tanked the markets with numerous hikes till nasdaq was at 10000. His job is about the stock market, but controlling inflation and employment rates
I mean... even Nancy/Obama/Sanders/etc have been talking about wanting to get certain global powers in check over the years...
They didn't want to do it... just talked about it. Now, someone is actually doing what they didn't want to do personally. Do you think they will stand in his way now that they have someone to blame if it goes sideways?
Huh, I don't think Obama can impeach anyone at this point. Is your argument that the democrats didn't want to end free trade and that they are also beholden to their capitalist masters? Because yes I agree
That's called stagflation, and the only way to beat it is typically escalating the rate to being a much higher level, not cutting, to stop the inflation first, which will cut demand, and hopefully cause prices to stabilize if not fall, but it will be a recession at the minimum all the same.
If they cut, and spending starts intensifying, while prices increase arbitrarily because of tariffs alone, then we are going to get into a situation of serious, run away inflation, which will the necessitate a very serious rate increase to stem.
That's why central banks are terrified of stagflation, because once it gets baked in, and it impacts the psychology of the market, it takes a paradigm shift in social mentality to change the perceptions of the economy enough to get out of stagflation.
The economy is as much science/mathematics as it is human psychology.
But for rn, they can not cut rates, or they risk serious inflation due to tariff price hikes alone. If anything, I am betting with high probability of a hike before the year is up as the tariffs filter throughout the economy and cause the price levels to rise. Without corresponding wage increases, moreover, people are going to struggle with their consumption, much less basic necessities.
However, since this is a tax, and not additional profit for these firms, there is no leftover money to give increases to employees without cutting into their bottom lines. We are about to witness a very 'fun' cycle of people working themselves to death for minimal return in order to just barely make it, while companies face decreasing sales domestically and internationally due to less money in people's pockets domestically and unwillingness to buy American/retaliatory tariffs shifting foreign demand away from US goods that are easily replaced.
It's literally how rates work. The federal reserve has a DUAL mandate to keep inflation low and the economy growing. If inflation is up, they raise rates. If growth is down, they lower them. If both are up, they can't do jack shit.
Just curious if laid off government workers who’ve been given severance packages and aren’t allowed to report as unemployed is reflected in this non farm payrolls report?
Listen to what Trump says about it. He wants other countries to pay their fair share through the tarrifs and stop taking advantage of America and bring back American manufacturing. And if you assume that he is not lying and means what he says then the only real logical conclusion is that he is an illiterate moron with an understanding of economics that is less than that of a second grader.
The finance YouTubers will have you believe he's intentionally crashing the economy in a 4D chess move to force the Fed to lower rates so that the national dept can be financed at a lower interest rate.
And there's the theory that he's crashing markets so he and his rich friends can buy up things for pennies on the dollar and basically copy paste the oligarch structure that was formed in Russia after the collapse of the Soviet Union.
I think any of the 4d chess theories are pretty dumb. The “they crash it to buy it for cheap” is particularly stupid. Elon Musk is probably going to end up losing over $100,000,000,000 (if not way more) from this lol. There’s no way this is going to be net positive for him. The “oligarchs” wealth is in the stock market so crashing it so they can buy things for cheaper is robbing Peter to pay Paul.
The reality is just: Trump isn’t very informed and is stuck in the past. He rightly recognizes that free trade is a race to the bottom that ends with us losing jobs to essential slave labor in undeveloped countries. Buts he’s also rash and stupid and belligerent so he can’t intelligently target the worst offenders and instead just indiscriminately tariffed everyone.
TLDR: Trump correctly identifies a problem (that other countries are disinclined to see due to the wealthy not wanting anything to change) but is also a stupid person so he puts forth a solution that’s even
worse.
"He rightly recognizes that free trade is a race to the bottom that ends with us losing jobs to essential slave labor in undeveloped countries."
This is offset by the other longstanding pillar of U.S. foreign policy, which was to encourage democratic governments in all countries. Much harder to race to the bottom if the slave labor can vote.
He rightly recognizes that free trade is a race to the bottom that ends with us losing jobs to essential slave labor in undeveloped countries. Buts he’s also rash and stupid and belligerent so he can’t intelligently target the worst offenders and instead just indiscriminately tariffed everyone.
what is the right way to do it, im wondering? i dont get the sense that this even being a problem is widely accepted, let alone that anyone has an idea how to fix it
Wait, you don’t think businesses having the option to pay Bangladeshis 50 cents an hour is a problem for a low skill American worker looking to make a living wage in a similar industry? Come on bro. Would you be cool with us just removing the minimum wage? If not, what is the real difference between paying American workers slave wages vs. paying foreign workers slave wages instead? In a free trade world, there is no difference.
what is the right way to do it
Targeted tariffs on problematic countries and specifically aimed at hitting industries you want to promote back home.
So, imposing a huge tariff on Chinese electric cars might be fine if we were working to increase electric car production here, change our sourcing to get materials from friendly countries, etc. But Trump just put tariffs on everyone and everything. So all he has done is place a 10-40% sales tax on everything imported.
Americans will eventually get this stuff from American companies, but it will take several years to build up the production and, in the meantime, we will all suffer. And so will our allies who we are fucking over for no reason.
Wait, you don’t think businesses having the option to pay Bangladeshis 50 cents an hour is a problem for a low skill American worker looking to make a living wage in a similar industry?
i do, but thats not the sense i get from most of the people talking about the tariffs, they sound to me like they think theres not even a problem worth tackling.
Targeted tariffs on problematic countries and specifically aimed at hitting industries you want to promote back home.
makes sense. we'll see if thats what we end up closer to, or if he really doesnt have a plan to negotiate and just does want blanket fire
And there's the theory that he's crashing markets so he and his rich friends can buy up things for pennies on the dollar and basically copy paste the oligarch structure that was formed in Russia after the collapse of the Soviet Union.
To be honest I'm pretty sure he is too dumb to plan for this kind of things, but the gang around him are not. My guess is they now what buttons to press to influence him towards their designs.
I've never seen anyone as puppified and resigned as don. He has many masters, but based on exactly what he said, his main one runs this giant country on a continent to the east. Those poor russian soldiers!
I am hopeful that everyone on earth sends Zelensky help. Everyone, send your baddest ass mother fuckers and have Zelensky say, fuck your peace plans. We're going to just kill them all.
Trump, start Global Trade War, US Dollar Default with Mar-A-Lago Accords (swap US Treasury Notes & Bonds for zero-coupon 100 year bond that can't be traded) --> US Debt Goes Bye-Bye and US can start manufacturing again once quality of life and the US Dollar are lower than whale shit so we can competitively manufacture cheap stuff. WARNING: Some work may be "Pay Optional" #WINNING
And there's the theory that he's crashing markets so he and his rich friends can buy up things for pennies on the dollar and basically copy paste the oligarch structure that was formed in Russia after the collapse of the Soviet Union.
can anyone explain how theyre gonna do that when their assets are evaporating at the same speed as or worse than the market? what money are they gonna use for this
If their money isn't all tied in assets with fluctuating value, they can directly buy smaller companies. Or they can finance it with their Assets as collateral. even if their billion shares of TSLA fell 40% that's still a big chunk of change that can be borrowed against and used for buying more things at the bottom.
If their money isn't all tied in assets with fluctuating value
but it is.
Or they can finance it with their Assets as collateral.
they couldve done that at higher valuation of their assets, so this is only profitable for them if their assets tank significantly less than the market since they'll be paying a whole bunch of interest.
even if their billion shares of TSLA fell 40%
the above doesnt work then because the whole market didnt tank 40%, but TSLA did.
I honestly thought him trying to manipulate the economy and market would force Powell to adjust rates in time for the US to refi a part of the national debt at a better rate.
I think the basic idea is that cutting interest rates stimulates the economy. It gets people borrowing (because they want to spend!). And the lower interest rates go, the less incentive people have to keep their money tied up in bonds or similar investments.
This is why the Fed used high interest rates to curb inflation. The economy was too stimulated. Raising interest rates was like giving the economy a xanex, to chill it out so prices would quit rising. Then, as inflation has waned, the Fed has able to slowly cut interest rates. But the Fed has to be slow; it has to wean the economy off of the high interest rates it set. If the Fed cuts interest rates too fast, the economy will get hyper-stimulated too fast and inflation will come right back.
Now we get to Trump. As President, he cares about the stock mark and economy. But he also wants his tariffs. His tariffs will hurt the stock market and economy. So he's hoping the fed will cut rates, which might stimulate the economy enough to counteract/balance out his tariffs. In his view, he can enact all of the tariffs without any of the pain if the Fed cuts rates.
That's the gist of it, I think.
There are disagreements over whether cutting rates will counteract the tariffs, and over what the right move for the Fed is, but the bottom line is that Trump thinks interest rate cuts will stimulate the economy, counteracting his tariffs.
the problem, as im sure youve seen plenty of others say already, is that inflation is already elevated. they don’t want to cut rates.
once growth slows to a crawl and inflation is also high, it’s very difficult to turn things around. you’ve found yourself outside of the normal boom bust yin yang cycle and can easily get stuck that way for years.
Because once you are deep in the only way to get money will be to sign in the military and cross the Canadian border while Don the con friends buy all properties.
The idea of tariffs are to bring manufacturing jobs back. If companies want the US market, they’ll have to have factories here and employ Americans.
Low interest rates make people spend money since why not buy what you want since the price is the same as waiting?
The disagreement is because nobody knows what will happen and they will rationalize their opinion AFTER the fact. There are sectors that tariffs won’t help.
Low interest rates create a bubble, specially in the housing sector.
They literally can't answer that.
99% of these people hate trump and musk because they're told to and just repeat everything. Guarantee nobody will explain anything to you because they haven't explained anything to anybody, because they have no idea.
Stocks went through the roof last year but the economy was fucked, stocks haven't been connected to the economy in years. That's not even a political statement, it can be observed just by looking at the data.
I have no idea, but to say he's intentionally going to cripple everybody is straight up fucking retarded.
What would he gain? Gets richer? Where's he going to spend the money when everybody's destitute?
You're a political pundit and don't even realize it, you belong behind Wendy's.
If FED rates go down his companies and Uber- rich buddies can borrow more money for cheaper and refinance previous loans at a lower rate. If companies go under, they get bailout money.
Genuinely, probably some of the dumbest shit I've ever read.
Based on all of your fabricated bullshit, the USD is going to crater in value.
That would, objectively, reduce the cost of all current loans significantly. But yeah, it's totally the loans he's trying to reduce the cost of by hammering reciprocal tariffs.
You're all saying he's killing the country. Correct?
What do you think happens to the global currency? They keep using USD for they jump to another one.
They're not going to keep using USD.
= Hyperinflation beyond the authority of any singular organization.
So you're saying he's going to refinance a bunch of shit after hyperinflation?
It's insane, and yet here I am getting bombarded by calling out the bullshit.
I fucking love it, I'm here on my day off laughing maniacally at this but unfortunately I have stuff to do and won't be back for a while, but I'm very excited to see the responses in a few hours.
As Fez from that's 70s show loved to say, GOOD DAY!
Trump is crashing the economy in an inflationary not deflationary way. I don't foresee the Fed wanting to cut rates, which is also inflationary. Trump doesn't understand that. If he wanted to get the Fed to cut rates drastically, he should have chosen deflationary market crashing lunacy, for example increasing income taxes by 50% instead of tariffs, which are consumption taxes.
Yeah, genuine austerity where you actually cared about deficits and debt would trigger massive rate cuts. Instead we're cutting a few billion dollars from expenses and a few trillion dollars from revenue, so it's really just an extremely sloppy and cruel stimulus exclusively for the richest people in the country.
Yes, drastically cutting government spending probably would have done it, too.
Trump doesn't have the patience or managerial skills to do that successfully. He tried with DOGE, but since the money has already been apportioned by Congress, he couldn't do that in the time frame he wanted.
Instead of higher taxes, cutting government spending would have done similar.
Fed only saw cumulative inflation ticking up .3 percent this year on PCE from 2.5 to 2.8 percent. Markets think they’ll try and save jobs as long as it doesn’t get out of control.
Companies are trying to bring manufacturing to the US, so there will be plenty of jobs (just not well paying).
So we will have low unemployment but way worse utilization of manpower. We will see people with specialized degrees have to start working labor in a drone factory.
Quality of life goes down hard and people can’t afford their loans… but they will not be unemployed.
High employment does not necessarily mean good usage of resources.
It will make the Fed position very hard, economy in the shitter, inflation rising, low unemployment… all their tools will be useless.
They are no doubt in a tough spot, we should start to see layoffs however as companies begin to digest & react to all of this. Consumers are going to pull way back and only buy essentials.
I think companies will try and go lean and just rely on the hoards of cash they have stockpiled until we can get a new president potentially.
I don't know ultimately how much manufacturing is going to be relocated, CEO's on the record as very reluctant to make any concrete plans with Trump because he could change his mind on a whim.
There will be hiring freezes and layoffs coming soon.
The country may have made a huge mistake re-electing him.
It's pretty unlikely companies will actually start bringing manufacturing to the US, unless there is a guarantee these tarriffs will last even after Trump's term. Buildig a new factory and getting it completely set up isn't a month process, and it's incredibly fucking expensive.
Factories aren't in the US right now because it's cheaper elsewhere. If the tarriffs go away, it'll again be cheaper to manufacture elsewhere. The companies that invested in new US factories are then left holding the bag, since their competitor's product will be cheaper (since manufacturing in other countries is cheaper).
If the genuine desire is to increase manufacturing in the US, you can indeed use tarriffs, but companies have to be aware of this beforehand, and have to be able to trust that these tarriffs will last a long enough time that the building of a new factory is cost-effective. Regardless of political affiliation, Trump has caused a lot of economical unrest, which makes companies a lot more hesitant and unwilling to take the risk.
What is more important for the Fed, inflation or stock prices?
Is this even a serious question?
Stock price is more important to the fed lol. That’s why the best advice you can give anyone is to invest in the stock market. Rich people will let any other negative thing happen long before they would let the market tank.
The best move for the Fed right now would be to keep rates where they are and force congress to reverse the tariffs, anything else is way too damaging for lowered rates to fix.
Agreed, the FED really has no reason to do anything here.
They should and likely will let the new norm settle and move to QE and such once the damage is done.
What is done is done, and this is a world we are going to have to figure out how to operate in now.
This whole thing really highlights how our branch's checks-n-balances process that was built in is failing. Something with such a global impact should have been approved by the House and Senate. We see our house and Senate are 2 steps behind the executive branch's public addresses.
If there is a Fed bailout, it will be in the form of direct cash transfers to corporations and rich people, like QE after 2008. No way they are lowering interest rates even further for fears of pushing up inflation.
While increasing inflation on top of the inflation increase from tariffs and then the same thing happens.
I guess it's going to be more of what the goal is, keep inflation reasonable, or avoid a crash. Either way you can't avoid both at the same time now, and it probably will be lucky if only one happens
Yep creates a bunch of free money chasing after the same few workers and limited resources (we will paying way higher prices for all supplies, minerals, wood, components etc).
This will be a unique era where we will have to take on much more debt just to be able to keep up current production levels.
Contrasted to before where people take on debt to increase production capacity.
This will lead to pretty bad inflation and stagnant or decreasing GDP.
Not if we’re in a state of stagflation. At that point there’s not much the Fed can do which is why JPow warned the Fed may be limited in its ability to respond.
It would not. It would supercharge spending, and as a result inflation, when inflation is already going to spike by 20% due to tariffs. It will completely distort housing and assets markets, and we will still go into a recession. However when the recession sets in, there will be nowhere for the fed to go to mitigate it.
Tariffs make things cost more dollars for the consumer.
Inflation makes the dollar less valuable for the consumer.
They have the same net result for the consumer, I suppose, reducing their buying power. But they are mechanically different in how they operate.
Lowering interest rates would give consumers access to cheaper borrowing to offset the tariff impact on their debt usage.
Would also pull cash out of high yeild accounts and bonds back into the economy and stock market. High yield accounts and bonds have been producing a safe ROI for a while now that contends with the SP500 avg ROI yoy. With very low/no risk...
And when those consumers exercise that cheaper borrowing, and more importantly the wealthy dip into cheaper debt with which to buy assets, overall consumer demand goes up.
Because of the tariffs, and trade wars, supply will go down.
Demand going up and supply going down at the same time means prices will increase rapidly.
Bonds have been contending with SP averages, but are at 1/5th of SP actuals over the last 2 years.
True true... I'm not saying the FED has an easy job. And fiscal tuning is complicated AF.
But... reduction of interest short term could ease the bleed if they need to bail out the stock market at a macro level. Not that they will, just that it could.
It would ease the bleed at first, but would trigger a series of dominoes that would make the crisis many times worse in six months if we didn't perfectly thread an invisible needle with invisible thread.
We are getting a recession either way. Going into a recession with low rates, low trade, high debt levels, after Trump printed 7 trillion 5 years ago and biden printed 2 trillion over the last 4 years. After we just got out of 2 years of very high inflation. In the middle of a housing price crisis.
We will have used all our tools at this point as hard as they can be used without breaking, right before the real crisis starts. So we would have nowhere to go. It would be a devastating depression akin to 1929. There would be nothing left in the toolbox.
It's how countries like Argentina went from world class economies to clown shows.
Yeah that's great and indeed 100% guaranteed... UNLESS there's mass inflation such as from, oh I don't know, adding 20-30% cost to everything through direct tax
Usually recessions are deflationary, and turning on the money printer partially counteracts that.
Tariffs, and a recession caused by tariffs, isn't fundamentally deflationary - it's inflationary. We're looking at potentially 5-10% inflation across the board without the Fed lifting a finger... and if the Fed does try to bail anyone out with a stimulus print or loan, that just adds more gas to the inflation fire.
Donald Trump isn't even smart enough to crash the economy properly.
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u/CoughRock 23h ago
who's making these prediction for rate cut ? didn't jpowell explicitly said he's going to wait and see ?