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Tiff Macklem and the Bank of Canada moved to cut overnight rates 25 basis points this week. Then, today, Christine Lagarde’s European Central Bank cut Eurozone rates 25 basis points.
So now everyone and their mother wants to know if Jerome Powell and the Federal Reserve are going to follow suit – sometime soon.
Fed funds futures suggest a cut is likely in September (but watch out if jobs numbers are weaker than expected).
But something’s off. The dollar should be ripping in this environment; it isn’t. In fact, if you look at movements in commodities and emerging markets, it looks like the greenback is weakening. That’s the real consequence of poor, debt-driven policy and a decade of artificially low interest rates. Whatever you think you’re going to gain by lower rates is taken away by higher costs.
Then again, the story of rate cuts in the late stages of an economic cycle is really about trying to hold onto something you’ve already lost.
The dollar may weaken further, and it might even lift stocks, but this video is about finding what’s likely to outperform….
