Sam, as you point out there are so many levers that are pushed and pulled that determine which way the market goes, but is the biggest lever consumer liquidity?
It seems like all this government spending and aid to onshoring factories, infrastructure and COVID has put money directly in all levels of consumer's pockets, and consumers spend. Unlike low corporate tax rates that aren't as directly putting money in workers hands (but are helpful), as long as consumers have jobs and money, companies earnings will do well. It's a virtuous cycle that may mean the Fed doesn't have to cut rates by much or at all.
Until housing hurts the economy and long term high rates hurt small businesses more than consumer spending is helping them, I'm not sure rates have to come down much. Corporations locked in low rates, inflation is lower but prices are high enough to fill corporate and smaller business's coffers and reduce the need to borrow at these higher rates.
I'm not an economist so this may be crazy talk. It just seems that, anecdotally, people have jobs and money, which means businesses do too.
I think you're exactly right. All variables you identify are the big primary forces of the economy. I think Fed policy tends to be about affecting those forces at the margins.
Sam, as you point out there are so many levers that are pushed and pulled that determine which way the market goes, but is the biggest lever consumer liquidity?
It seems like all this government spending and aid to onshoring factories, infrastructure and COVID has put money directly in all levels of consumer's pockets, and consumers spend. Unlike low corporate tax rates that aren't as directly putting money in workers hands (but are helpful), as long as consumers have jobs and money, companies earnings will do well. It's a virtuous cycle that may mean the Fed doesn't have to cut rates by much or at all.
Until housing hurts the economy and long term high rates hurt small businesses more than consumer spending is helping them, I'm not sure rates have to come down much. Corporations locked in low rates, inflation is lower but prices are high enough to fill corporate and smaller business's coffers and reduce the need to borrow at these higher rates.
I'm not an economist so this may be crazy talk. It just seems that, anecdotally, people have jobs and money, which means businesses do too.
I think you're exactly right. All variables you identify are the big primary forces of the economy. I think Fed policy tends to be about affecting those forces at the margins.
So, if the government reigns in spending which could slow down the economy, maybe then it's time for the Fed to cut.