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Fed cuts half point in emergency move amid spreading virus

bloomberg.com

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Re: Fed cuts half point in emergency move amid spreading virus

#321

Post by thedance »

holtalanm wrote: post #311
thedance wrote: post #71

Earlier quoted context omitted.

Have your seen any of them open their mouths at the debate? Moderator: solve black poverty Candidate: we’ve got to get them into houses so they can build wealth.

that....doesn't necessarily correlate with making housing more expensive, though. There are government-funded housing programs in other countries that they may be referencing as a model, for example.

If it “builds wealth” faster than any other means then it necessarily becomes more expensive for new entrants. This is an inescapable outcome.

Re: Fed cuts half point in emergency move amid spreading virus

#322

Post by AnimalMuppet »

jjoonathan wrote: post #124
lonelappde wrote: post #55

Earlier quoted context omitted.

The Fed is independent of the Executive except at appointment time.

Like the Judiciary is independent of the Executive and provides a check and balance to its power?

Actually, yes. The judiciary does provide a check to executive power - just not as often as the press tells you it should.

Re: Fed cuts half point in emergency move amid spreading virus

#323

Post by mindslight »

danans wrote: post #293
mindslight wrote: post #201

Earlier quoted context omitted.

Housing is overpriced because anyone can go to a bank and get as much cash as the house is appraised for, which is circular. So the actual constraint is just the inverse of interest rates. The same goes for education. There are underlying supply problems with each of these that need to be directly addressed, but they're exacerbated by the current economic policy of giving out as much rope needed to hang one's self. I…

> Housing is overpriced because anyone can go to a bank and get as much cash as the house is appraised for, which is circular. The appraised value is just a signal how much collateral a bank can rely on for the loan, which is why most loans with good interest rates have a maximum loan to value ratio. Banks don't want to own houses, they want to own a piece of the borrower's future productivity, manifested as interest…

I did go on to acknowledge the "underlying supply problem". But this thread is about financials, and without the endless supply of money, asset valuations would be much lower.

Re: Fed cuts half point in emergency move amid spreading virus

#324

Post by danenania »

Retric wrote: post #132
rsync wrote: post #97

Earlier quoted context omitted.

" ... I'm still slightly bearish on the whole situation due to the combination of the virus' absurdly high infection rate[0] and its ridiculous ~25-30 day incubation period ..." You're right to highlight those aspects of the virus and I find them noteworthy as well. However, the statistics I am most interested in is mortality rate and rate of asymptomatic infections. I note with interest that among the 700+ infected…

The cruse ship had 135 infected on February 10th, jumping to 634 on February 20th. So, most of those 700 are recent infections. The actual long term death total for the cruse ship is unknown, but should include people who died in their home country after returning. The good news is assuming you trust China’s numbers new infections are down massively from a February 2nd peak. Deaths in China are also down significantl…

I feel like the slowing infection rate in China (if it's actually true) is both very encouraging in the sense that it could show the virus actually is possible to contain, and also pretty scary in that so far the only measures that seem to be working at all are extremely widespread and draconian quarantines.

Re: Fed cuts half point in emergency move amid spreading virus

#325

Post by rubidium »

throwaway3157 wrote: post #235
76543210 wrote: post #215

I'm looking to refinance. If my lender says the rate hasn't changed from 3.25% since last week, that's bullshit Right? How long should I wait for the rates to move?

It looks like the rates actually went slightly up from a few days ago (though these depends on many variables, but I'm comparing to my local rate that I've been checking for weeks). Might change tomorrow based on today's news.

How do you check your local rate?

Re: Fed cuts half point in emergency move amid spreading virus

#326

Post by OscarCunningham »

mxschumacher wrote: post #205
onlyrealcuzzo wrote: post #191

Earlier quoted context omitted.

The Fed's job is supposed to be to keep inflation stable. Inflation is as stable as it's ever been. If stock prices go down, that means nothing to inflation. Somehow, since Greenspan, the Fed's job evolved to include pumping up asset prices to benefit asset owners (the top 5% own 80% of assets).

The fed's target is 2% inflation, not stability of the inflation rate. You could say the relative stability of the value of money is a goal

I think you have it backwards. Stability is the overall target, and the 2% target was chosen as a way to achieve that. See for example https://www.federalreserve.gov/faqs/money_12848.htm.

> The objectives as mandated by the Congress in the Federal Reserve Act are promoting (1) maximum employment, which means all Americans that want to work are gainfully employed, and (2) stable prices for the goods and services we all purchase.

> Following its meeting in January 2012, the FOMC issued a statement regarding its longer-run goals and monetary policy strategy. The FOMC noted in its statement that the Committee judges that inflation at the rate of 2 percent (as measured by the annual change in the price index for personal consumption expenditures, or PCE) is most consistent over the longer run with the Federal Reserve's statutory mandate.

Re: Fed cuts half point in emergency move amid spreading virus

#327

Post by gscott »

ptyyy wrote: post #5

We're basically running out of tools to combat an actual financial crisis. https://www.investopedia.com/terms/l/liquiditytrap.asp

The best tool is to let the virus shake things out in the economy. Well managed companies will survive those that are not go by the wayside.

Re: Fed cuts half point in emergency move amid spreading virus

#328

Post by zcase »

50 bps cut, initial rally, faded super fast and now down for the day. Would be interested to see if Fed cuts further.

The first order effects weren't so large to stem the selloff (first order meaning the PV effect of lowering discount rate).

As for second order effects (rate cuts to spur economic activity), I'm not even bullish about the mechanism to transmit rate cuts to the real economy normally, but I think in a quarantine situation, those mechanisms are even more diminished as there's less economic activity. Thinking out loud, demand will probably just hit a wall--there's no elasticity here when people are worried about their lives.

The only mechanism that sounds plausible to flow through to the real economy is fiscal. Government buys Pampers, burns them, buys them again. Or keep lowering rates to raise asset prices by a purely mechanical lowering of discount factor.

Re: Fed cuts half point in emergency move amid spreading virus

#329

Post by harimau777 »

codelitt wrote: post #234
aazaa wrote: post #51

For those saying the Fed is running out of ammunition, study what the Bank of Japan has done. It owns close to 80% of the Japanese ETF market currently, with no end to the expansion of balance sheet in sight. After buying long treasuries, it's not unreasonable to imagine the Fed buying stocks, either individual issues or ETFs. The President would be for it, and it would be hard to drum up any opposition to it in cong…

God help us all if our central bank starts taking cues from the Bank of Japan or the ECB and their zombie economies. Our inability to suffer short-term consequences for long-term prosperity is a real issue that we as a country need to figure out how to solve. (Can you solve for human nature?) The fed shouldn't have made cuts in 2019 at the height of the market, we should have let failing banks fail, we need to start…

I think a good start would be if average people were confident that they would take part in the long-term prosperity. Right now, that doesn't seem like such a good bet.

Re: Fed cuts half point in emergency move amid spreading virus

#330

Post by thorwasdfasdf »

aazaa wrote: post #51

For those saying the Fed is running out of ammunition, study what the Bank of Japan has done. It owns close to 80% of the Japanese ETF market currently, with no end to the expansion of balance sheet in sight. After buying long treasuries, it's not unreasonable to imagine the Fed buying stocks, either individual issues or ETFs. The President would be for it, and it would be hard to drum up any opposition to it in cong…

this is a good point. there is something deeply disturbing when the Fed manipulates on a scale that controls the pricing of the entire stock market
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