CNBC's "Fast Money" The Fed’s Big Half Point Cut… And The Impact On The Housing Market 9/18/24
Sep 18, 2024
The Federal Reserve has made a significant move by cutting interest rates for the first time in four years. This decision impacts stocks, mortgages, and builders, creating ripples across the housing market. There's a focus on how lower mortgage rates could boost housing equity while also considering the challenges in loan availability. Boeing's labor struggles add another layer to market concerns, as analysts weigh investment opportunities and caution in a shifting economic landscape.
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Confusing Market Reaction
- The Fed's 50 basis point cut sent markets to all-time highs but closed lower, causing confusion.
- This unusual situation involves accelerating profit growth alongside rising unemployment.
Historical Precedent and Market Signals
- Two previous 50 basis point rate cut cycles preceded market downturns of 40% and 50%.
- Bond market resteepening and VIX increase suggest caution despite initial market highs.
Risk of Re-Inflation
- Rising long-term bond yields suggest the market expects higher future growth and inflation.
- This indicates a risk of the Fed's easing policy re-igniting inflation.