tyb/s
Kudlow Calls For "Immediate" 50bps Rate Cut Signals Imminent Recession
Just weeks ago, President Trump's top economic advisor Larry Kudlow was bloviating about the strength and sustainability of the US economy as the cleanest dirty shirt in the world.
Something appears to have scared him as today, echoing Trump's latest Fed pick Stephen Moore, Kudlow is calling for The Fed to "immediately" cut rates by 50bps.
Axios reports that Kudlow "would love to see" such a downward move, adding that the central bank shouldn't have ever set overnight interest rates past 2%.
The market itself is pricing in almost 40bps of rate-cuts in 2019 while The Fed remains stuck at no rate-change in 2019.
The problem for Kudlow in calling for this immediate rate-cut is this - the last three recessions all saw a Fed rate-cut three months before they started.
(d'oh)
However, it seems Kudlow has lost his mojo as the dollar is higher and stocks showed zero reaction to his comments.
(they can't really react in a way that would show they agree on the last day of the quarter imo. )
https://www.zerohedge.com/news/2019-03-29/kudlow-calls-immediate-50bps-rate-cut-signals-imminent-recession
Cap 2 shows the disconnect that the markets have with actual results. Think of all those low volume 'rally's' since the start of the year.
What you are seeing is the levitation of the equity markets against the actual stated earnings results reported over that time period.
Cap 3 illustrates this problem over a longer time period.
It is called bifurcation and has been an issue since the Hussein administration shoved trillions of dollars of credit into the system starting in late 2012.
What is Bifurcation?
Bifurcation is the splitting of a larger whole or main body into two smaller and separate units. It has applications across several fields of study, but when used in financial terminology is usually describes either the breaking of a larger entity into smaller divisions, or disjointed market movements.
See here for financial terms explained
https://www.investopedia.com/dictionary/