The Fed, the Consumer, and Trump – December 11, 2019
The Fed has lowered its key rate three times since July to a range of 1.50-1.75%. On Wednesday, it’s widely expected the Fed will hold rates steady.
- As we enter 2020, Powell is determined to prevent the economic malaise in Japan and Europe from washing up on our shores.
- While the consumer remains strong, monetary ammo in the Fed’s toolbox is limited.
That leads us to the consumer
Spending has been upbeat, and early data suggest consumers were not reluctant to spend during Black Friday weekend.
- We’ll get an updated look on Friday when the U.S. BEA releases November retail sales.
Trade and Trump and December 15th
There has been no shortage of trade headlines that suggest a trade deal with China is either likely or won’t be reached at all.
- Both sides have been using the media to outmaneuver the other.
On December 15th, tariffs are scheduled to rise on Chinese imports. Both sides would like to avoid another round of tit-for-tat retaliation. But we’ve seen miscalculations before.
Best outcome—a limited phase one deal is reached, and the scheduled hike in tariffs is canceled.
Potential outcome—no deal is reached, negotiations continue, and tariffs are delayed.
Worst outcome—tariffs are raised, and short-term market volatility ensues.
Stay tuned.
Created 2019-12-11 15:43:24