Fed Cuts rates at 50 bps today

[BlackHatCoiner]

What is your theory on why this massive cut was necessary? I think there is something in the data that suggests the economy is not as strong as most people think.

My opinion is that almost every monetary theory these people depend their data on is flawed. According to their theory, their estimations and actions might be correct, but since the entire theory is flawed, then it doesn't really matter. They view the economy as a problem waiting to be solved by flipping a lever.

For god's sake, the FED cu the rate by 50 points back to 5%, meahwile the counties with the highest demographic on the forum

Given that the actions the US takes in the their economy influences the rest of the world, it doesn't surprise me that people do not talk about Iran or Pakistan, though. There's clearly a world power, in here, whose actions are often made in expense of the rest of the world.

[JeffBrad12]

So yesterday they cut rates, and the market was a sell the news type of event. It hit a new ATH and then it closed at the lows of the day. Today the market gaps up and dow jones and sp500 all enter new ATH. Crypto is rallying and so is Gold and Silver.

Honestly I would becareful. This might be a trap. If the market stays in this area, then its a safe long but I have a feeling that the market makers know that everybody is taking money out of their bonds and putting into equities and they are expecting a boom. And shortly after there might be a huge dump. Similar to what happened in 2008. I dont trust this move at all.

I think same scenario will just play out like when fed cut rate in 2020, stock index and some other hedge against inflation will go up high enough one week later, but few first days after the announcement it will be "sell the news" event, though it's still uncertain anyway, but I expect current rally to take time first and then going up later.

as for BTC i expect the price to retouch at least $70k again, but I don't really know with other equities, maybe similar scenario will play out.

[fuguebtc]

So yesterday they cut rates, and the market was a sell the news type of event. It hit a new ATH and then it closed at the lows of the day. Today the market gaps up and dow jones and sp500 all enter new ATH. Crypto is rallying and so is Gold and Silver.

Honestly I would becareful. This might be a trap. If the market stays in this area, then its a safe long but I have a feeling that the market makers know that everybody is taking money out of their bonds and putting into equities and they are expecting a boom. And shortly after there might be a huge dump. Similar to what happened in 2008. I dont trust this move at all.

I think same scenario will just play out like when fed cut rate in 2020, stock index and some other hedge against inflation will go up high enough one week later, but few first days after the announcement it will be "sell the news" event, though it's still uncertain anyway, but I expect current rally to take time first and then going up later.

as for BTC i expect the price to retouch at least $70k again, but I don't really know with other equities, maybe similar scenario will play out.

With what happened 1 day after the Fed announced the interest rate cut: the DOW index reached ATH, the S&P500 also reached ATH and bitcoin also had significant growth. So the "sell the news" scenario probably didn't happen as many predicted. And with what's going on, it's no surprise that everyone is optimistic about the future of the market both in the short and long term. But in my opinion, we should not be too complacent and let our guard down because anything can happen.

This is just the first rate cut, we don't have enough data to assess yet so I think we need to wait for the inflation report next month to assess the impact of the rate cut and the state of the economy. We should not celebrate too soon.

https://edition.cnn.com/markets

[Sayeds56]

Nice catch...I also thought as much. Election is around the corner and US wants to give false hop to ther citizens that they will be a better tomorrow by cutting down the rates by 50bp so that citizens can be encouraged to vote, and after election they do whatever they like.

It is funny to see that even the US cannot do much to stop the rate of inflation in their country but claim that they are economy experts. The only thing that they know how to do is to print more money. It is similar to adding petrol to a burning fire.

You are absolutely right, politician all over the world often manipulate financial to create false for the people to get votes. The timing of the interest rate is very strategic, specially when the elections are over a month away. While printing more money can stimulate the growth in the short term, however for sustainable growth much more stronger measures are required beyond just cutting interest rates. One of the measure for long term growth could be investment on human development.

[adaseb]

Yeah everything is pumping due to this rate cut. Look at the stock market. Look at the Gold market. And look at crypto.

Its funny because we assumed it was a sell the news type of event. Where we got the rate cut, we pumped but closed the day on the low. And later on we started to pump again. Its also strange how the 10 Year yield is not decreasing from the time of the time. Maybe it was oversold.

I think we will get a huge move this weekend due to this news. We also have Blackrock CEO pumping bitcoin saying that its a flight to safety during uncertain times as this. I think if Trump wins in November then we might break ATH sometime around then. It should sure be an interesting time for any risk-on assets like stocks and crypto.

[JeffBrad12]

With what happened 1 day after the Fed announced the interest rate cut: the DOW index reached ATH, the S&P500 also reached ATH and bitcoin also had significant growth. So the "sell the news" scenario probably didn't happen as many predicted. And with what's going on, it's no surprise that everyone is optimistic about the future of the market both in the short and long term. But in my opinion, we should not be too complacent and let our guard down because anything can happen.

This is just the first rate cut, we don't have enough data to assess yet so I think we need to wait for the inflation report next month to assess the impact of the rate cut and the state of the economy. We should not celebrate too soon.

https://edition.cnn.com/markets

nice insight right there.

the rate cut isn't all rainbow for equity investor, it could also be a sign of weakening economy that soon might also show up its true color, not only limited to certain country but around the world.
I'd definitely watch out for for the sudden price movement and investing wisely until we finally figure out what happened after the rate cut taking place and what effect it has toward the current economy.
but at the same time i'm also pretty bullish.

[Poker Player]

Some believe that inflation is under control and the economy is entering a recovery phase as the Fed has declared. Meanwhile, some suspect that the Fed is worried about a recession and that is why they are rushing to cut interest rates.

No one in their right mind believes that inflation is under control. Least of all by adding fuel to the fire. If someone goes on television saying that inflation is under control, it is because he knows that it is not under control and he is obeying a political program.

It is similar to that US president with cognitive problems who, when the war in Ukraine started, suddenly forgot that the runaway inflation had started half a year ago, under his mandate.

This is a political move to stimulate the economy in less than two months, and if inflation gets out of control again they will blame Putin, capitalism or whatever.

[bitgolden]

I know that it wasn't a shock to anyone, inflation was the reason why the interest rates were higher and since inflation isn't as bad as it used to be then we can say that we are seeing bps a lot worse and we could see it drop more and more in the end as well. We shouldn't really see it change this much because it looks like we are going to see the interests go even lower because inflation will go down even more as well.

I think it is going to end up with a price point that will not be simple that will be all that easy to handle and we could just consider this as normal without much trouble. I think it is going to take a while for people to see this as a simple thing to make money from so we shouldn't really consider this as a thing of that is done just now and it will happen again so we should probably see it go down again and again as well. So, there is nothing that could go wrong with this and that is why we need to be calm about it and move on. Price already went up thanks to it.

[Yatsan]

I am sure you heard how the fed cut rates at 50 bps today, this is a surprise because Powell was usually dovish however this 50 bps cut seems aggressive since the US economy is fairly strong and there was a strong 25 bps consensus just until last week.
 
Now all of a sudden we get a 50 bps rate cut. Remember Sept 18 2008, we got a 50 bps rate cut also, and the rest is history.

What is your theory on why this massive cut was necessary? I think there is something in the data that suggests the economy is not as strong as most people think.

The 50 bps cut came as a surprise to many, and more so particularly when it came from the soft-spoken Powell, who is often dubbed relaxed in demeanor. So much for the dovish lean. It seems a big switch. Especially when there is said to be consensus on just 25 bps.

Worth noting is that comparison to the 2008 cuts. Comparison in history usually are a misunderstanding. Do you know if there exists some data that shows economic problems which are not visible? For example, inflationary pressures or global uncertainty? It could play more than we reckon into Fed's decisions. How this will play is interesting; and what other details will be revealed within the following weeks

I know that it wasn't a shock to anyone, inflation was the reason why the interest rates were higher and since inflation isn't as bad as it used to be then we can say that we are seeing bps a lot worse and we could see it drop more and more in the end as well. We shouldn't really see it change this much because it looks like we are going to see the interests go even lower because inflation will go down even more as well.

I think it is going to end up with a price point that will not be simple that will be all that easy to handle and we could just consider this as normal without much trouble. I think it is going to take a while for people to see this as a simple thing to make money from so we shouldn't really consider this as a thing of that is done just now and it will happen again so we should probably see it go down again and again as well. So, there is nothing that could go wrong with this and that is why we need to be calm about it and move on. Price already went up thanks to it.

I understand what you are saying! If there is a sign of slowing down of inflation Then surely, interest rates too will behave. The notion that interest rates will continue falling is an interesting one. Particularly, if the economic indicators keep looking upward.

I have to admit that the market should be given time to find its feet with these new changes. And the investor should learn to stay calm and not hurry into taking decisions. This recent deflation is already starting to put its pressure on the price. And so, it seems that we are in some kind of adjustment period. It's going to be very different. We'll just wait and see what happens in the market. Whether this type of trend continues or it will reverse it remains to be seen.

[The Sceptical Chymist]

The Fed was going to get to a 0.50% cut eventually, but I have to say I am a wee bit surprised that they didn't start off slow with the cutting--especially since there was so much talk and speculation as to what effect a 50-basis point cut would have on inflation and, especially, the stock market.

I guess we're going to find out one way or another; my guess is that the stock market (and perhaps bitcoin, too) will react positively.  The thing is, the market has been in an almost unbroken bull run for what, 15 years now?  If stock continue to soar way past whatever their fair value is, it's just a set up for a huge crash....eventually.  But I've been waiting for that crash for years, and it never seems to come.

Meanwhile, the reported inflation numbers have been coming down for months already, and I suspect that'll continue.  But ultimately as with anything in economics, it's a crapshoot the outcome none of us can predict with 100% accuracy.  This cut is good for borrowers but bad for savers, and people already aren't saving enough money as it is.  I'm tempted to say I hope the Fed knows what it's doing, but I've never had faith that they do. 

[Wind_FURY]

The 50 basis point rate reduction in September of 2008 had nothing to do with the cause of the Great Recession.  The great recession actually started in Dec of 2007, so well ahead of the Sept 08 50 bip reduction you mention.  

And actually, the Federal Reserve during 2008 DID EXPECT the crash and the bankruptcies to start coming very aggressively. That was why they started the rate cuts and made the pivot to Q.E. to pump money into the economy. What happened after that is one of the longest bull markets in history. The COVID-19 Crash of 2020 would have stopped that, but they BRRRRR-printed massive amounts of money again, and the bull market continued.

I think this rate cut was a measure taken on by quite a few factors.  Read a good article detailing it..

"Whether the Fed can calibrate its rate cuts so as to achieve what economists call a soft landing - the policy coup of guiding an economy through a period of tight monetary policy to stifle inflation without jarring the labor market - will be one of the most important ways its actions will affect regular Americans". - https://www.reuters.com/markets/us/what-does-fed-rate-cut-mean-american-households-2024-09-18/
 

It's Equilibrium Maintenance based on "the data" is what Jerome Powell would call it. But how long can they "maintain" it?

[pooya87]

And actually, the Federal Reserve during 2008 DID EXPECT the crash and the bankruptcies to start coming very aggressively. That was why they started the rate cuts and made the pivot to Q.E. to pump money into the economy. What happened after that is one of the longest bull markets in history. The COVID-19 Crash of 2020 would have stopped that, but they BRRRRR-printed massive amounts of money again, and the bull market continued.

It sounds like what you are describing is mostly inflation not so much bull run. In a bull run the value increases but in inflation the price increases. What happens when they print money is inflation. For example before 2008 you could have rented a small apartment in Manhattan for something like $600-$700, today you have to pay nearly 2 grand for that roach infested rat hole. If anything the value of that apartment has gone down (aging building) but the price of it has gone to the moon. That is inflation not bull run.

[Wind_FURY]

And actually, the Federal Reserve during 2008 DID EXPECT the crash and the bankruptcies to start coming very aggressively. That was why they started the rate cuts and made the pivot to Q.E. to pump money into the economy. What happened after that is one of the longest bull markets in history. The COVID-19 Crash of 2020 would have stopped that, but they BRRRRR-printed massive amounts of money again, and the bull market continued.

It sounds like what you are describing is mostly inflation not so much bull run. In a bull run the value increases but in inflation the price increases.

That's not necessarily true. When the Federal Reserve prints money, that money is first held by entities at the top of the financial system. They invest the money in assets, real estate, commodities, build new businesses, expand business - spending. BUT sooner or later, and by the time that money has reached the hands of the plebs, inflation has already happened because from all that increased spending - including increased government spending.

Print Money = Inflation. Bull markets/a booming economy and inflation are not exclusive from one another.

That's why we have Boom And Bust Cycles. The Federal Reserve prints, then the Federal Reserve tightens. But zooming out, the money supply has always expanded.

Satoshi knew what he was doing.

[pooya87]

Print Money = Inflation. Bull markets/a booming economy and inflation are not exclusive from one another.

That's true. In a debt-based economy you create more debt and inject it into the economy to artificially "pump" it up and as we know from watching the shitcoin market, every pump is followed by a dump hence the "Boom And Bust Cycles" which is the equivalent of our own altcoin pump and dump schemes.

I still wouldn't call it bull market though... for the same reason I don't call altcoin pumps a bull market.

[justdimin]

I am sure you heard how the fed cut rates at 50 bps today, this is a surprise because Powell was usually dovish however this 50 bps cut seems aggressive since the US economy is fairly strong and there was a strong 25 bps consensus just until last week.
 
Now all of a sudden we get a 50 bps rate cut. Remember Sept 18 2008, we got a 50 bps rate cut also, and the rest is history.

What is your theory on why this massive cut was necessary? I think there is something in the data that suggests the economy is not as strong as most people think.

Having rates dropped means people will not be investing into banks that much, and they will look ways that will make them more money and that is why bitcoin price is increasing. I think we are going to see a ton of people who will end up making some good amount of money one way or another, and I think we are going to see this growing to be a great profitable business if we keep on seeing bitcoin grow when the rates drop.

People know this, so they invest before the decision is known, and it happened many times before, it didn't drop in other ones but this time if people did it then they were right and it was a good one. I think it is going to be a good decision to keep doing this, it should be profitable to keep on investing into bitcoin whenever there is a rate decision coming up. To be fair, I am a little biased towards it because I think it's always a good time to invest into bitcoin it doesn't matter if it is going higher or not, and we should do fine with it.

[martinex]

Honestly I would becareful. This might be a trap. If the market stays in this area, then its a safe long but I have a feeling that the market makers know that everybody is taking money out of their bonds and putting into equities and they are expecting a boom. And shortly after there might be a huge dump. Similar to what happened in 2008. I dont trust this move at all.

if it happens, market players will wait and see again in choosing where else their money will be placed to suit their plans. If we look at it until now, the market is still quite good at responding after interest rates were lowered on September 18th.

[tabas]

There is no other reason for that cut-rate but to slow down the inflation. But despite that, inflation will just continue and won't be stopped. And connecting it to Bitcoin, we always get something every bull run such as market movers and contributors like this. The last one was near the height of the pandemic when printing money happened and that's still equal to inflation. This time, just slowed down but we'd see that even the other markets are also on ATH. It seems that everything is cyclical and we have to be wise on how we react on this and so as the entire world economy.

[pooya87]

What is your theory on why this massive cut was necessary?

Is it really massive?
In any case,... This is 99% political and I'd say there is only 1% chance that has anything to do with economy.

A while ago I said the energy prices are coming down, but that decrease was small and it is also reversing. For example for the past 9 days oil price has been rising ($69 to $74) and the tensions are rising in the world as well which means the US government will spend (or rather waste) more money which means they will have to print more money to cover the deficit. All of which means more inflation which then requires higher rates.

This is why I say chances of it having anything to do with economy is slim to none. The US economy is getting worse.

However, there is an election coming in the US and the party in office wants to give positive signals to the voters to encourage them to vote for their party again. Hence the rate cuts

Bad news, because of increasing tensions and US regime's warmongering around the globe the energy prices have kept on rising since my last post. We saw oil price reach $79 again (currently $78) and is up from $69 from earlier.

That causes more inflation which they can only battle by increasing the rates!

There is another contributing factor to inflation in US and that is the global transport costs that are increasing for the US ever since the Red Sea has been shut off to all US linked ships because of the support US regime is giving toe the Israeli terrorists.

I am very curious to see if this inflation in this situation can help bitcoin price go up in the following months...

[Fortify]

I am sure you heard how the fed cut rates at 50 bps today, this is a surprise because Powell was usually dovish however this 50 bps cut seems aggressive since the US economy is fairly strong and there was a strong 25 bps consensus just until last week.
 
Now all of a sudden we get a 50 bps rate cut. Remember Sept 18 2008, we got a 50 bps rate cut also, and the rest is history.

What is your theory on why this massive cut was necessary? I think there is something in the data that suggests the economy is not as strong as most people think.

Everything that I was reading up to this base rate cut suggested that half a percentage point was a possibility. Especially when the markets got spooked about a month before it and showed how quickly things can go bad, that probably indicated to the policy makers that they needed to start easing off with the high interest rates. The last thing they wanted to see was a recession and have everyone shouting about how they acted too slowly. They can go a bit easier now and will likely wait another month or two before taking the next action, because they want to deflate the balloon slowly and that is how other central banks are treating reducing interest rates.

[dansus021]

Gold fly bitcoin fly stock fly this is gonna happen if the FED cut the rates i just do quick google search and found "Fed officials predicted that they would cut interest rates to 4.4 percent by the end of the year — much lower than the 5.1 percent they had been expecting in June, when they last released economic estimates. And by the end of 2025, they expect to lower borrowing costs another full percentage point, to 3.4 percent." - https://www.nytimes.com/2024/09/18/business/economy/fed-reserve-interest-rate-cut.html

in that news means this is bullish when the feed is cutting the rates until end of the year