Hello traders everywhere. As expected the Fed cuts rates by 25 basis points to a range of 1.75 - 2.00%. This cut is the second cut that Fed has implemented in 10 years, the first rate cut came back in July when the Fed cut the rate by 25 basis points to a range of 2.0% - 2.25%.
The market was clearly disappointed by the 25 point cut as it was expecting or hoping for a 50 point cut. The S&P 500, DOW and NASDAQ have all headed lower on the day with the NASDAQ leading the way losing -1.0%.
Though the U.S. economy continues growing at a "moderate" rate and the labor market "remains strong," the Fed said in its policy statement that it was cutting rates "in light of the implications of global developments for the economic outlook as well as muted inflation pressures."
With continued growth and strong hiring "the most likely outcomes," the Fed nevertheless cited "uncertainties" about the outlook and pledged to "act as appropriate" to sustain the expansion.
New projections showed policymakers at the median expected rates to stay within the new range through 2020. However, in a sign of ongoing divisions within the Fed, seven of 17 policymakers projected one more quarter-point rate cut in 2019.
Five others, in contrast, see rates as needing to rise by the end of the year.
The divisions were reflected in dissents that came from both hawks and doves.
St. Louis President James Bullard wanted a half-point cut while Boston Fed President Eric Rosengren and Kansas City Fed President Esther George did not want a rate cut at all.
There was little change in policymakers' projections for the economy, with growth seen at a slightly higher 2.2% this year and the unemployment rate to be 3.7% through 2020. Inflation is projected to be 1.5% for the year, below the Fed's 2% target, before rising to 1.9% next year.
Key Levels To Watch Next Week:
- S&P 500 (CME:SP500): 2,853.05
- Dow (INDEX:DJI): 25,637.43
- NASDAQ (NASDAQ:COMP): 7,766.67
- U.S. Dollar (ICE:DX): 97.47
- Gold (NYMEX:GC.Q19): 1,504.30
- Crude Oil (NYMEX:CL.N19): 62.28
- Bitcoin (BITCOIN:BITSTAMPUSD): 10,949.00
Every Success,
Jeremy Lutz
INO.com and MarketClub.com
I'm afraid for the public when interest rates get cut. Much too often people go crazy with the extra money they can spend. They buy unnecessary things and owe too much money and as everyone knows interest rates will come back up and if the loans aren't fixed the public will get a slap on the face wake up call. But that won't hurt trump and all the financial buddies, they'll rake in the money and cars and homes that the public put up for collateral.
Too many people are foolish, they don't know how to control their spending, how to save money, how to invest for the long run. They live for the means of now not later. Have fun now worry later, Mo & Dad or Grandma & Grandpa will help out. Listen up! Why do you think there are so many homeless? Because Grandma & Grandpa's money ran out, mom & dad got smart and stopped helping now your broke and out. You didn't care, now others don't.