If the present selloff in stocks continues, I strongly suspect we’ll see the Fed step in with a rate cut — possibly even before their next meeting.
Regular readers know my view; it’ll have virtually no significant or sustainably positive impact on the real economy, but, certainly, we can expect it to inspire a (I suspect — by itself — unsustainable) bounce in the stock market.
RBC absolutely gets it!
RBC: “Cutting now when Fed funds is already sitting 100 basis points below neutral further cements the dangerous precedent already set that the only independent variable in the policy reaction function that matters is what the S&P 500 is doing of late. .. It boggles the mind.”
Thanks to Carl Quintanilla for posting this quote on his Twitter feed.