Weekly Chart Review

Rate Cuts - Good or Bad?

Over the last couple of weeks, I’ve made the case that we are in the early stages of a recession.

The feedback I have received after making such claims has coalesced around a few themes:

“The US economy is too strong to be in a recession…”

“The Sahm Rule, and other metrics, no longer apply in the post-pandemic liquidity fueled era…”

“The Fed is about to cut rates which will spur the economy along thus ensuring a ‘soft’ or ‘no’ landing…

It amazes me how people almost take offense to the mere suggestion that the US could be entering a recession. It’s as if you told them that their newborn baby is ugly.

Recessions are a natural condition of the economic/business cycle and should be expected to occur from time to time.

Where we’ve gone wrong from a central planning aspect in this country is in trying to keep recessions from ever happening at all.

If we had more “regular” recessionary periods, we would have less of the boom and bust cycles that have characterized our economy for the better part of the last 30-40 years.

I can’t solve that, so my goal is to help others prepare for said recessions so that they aren’t caught off-guard.

Conversely, once we are knee-deep in the next recession, at the appropriate time, my goal will be to suggest “I know this feels terrible right now, but we need to start getting back into the market because the discounts are just too substantial…”

September Rate Cut

With that out of the way, I’d like to discuss the potential for a September rate cut.