Submitted by Taps Coogan on the 18th of October 2019 to The Sounding Line.

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Bleakley Advisory Group CIO, Peter Boockvar, and Barry James, of James Investment Research, recently spoke with CNBC about the likelihood and potential impact of a Fed rate cut in October. Both feel that while another rate cut is unlikely, the outlook and hard data on the economy are stable, if not starting to improve.

 

Some excerpts from Peter Boockvar:

“I think that the Fed is going to pause in October. But when you are cutting interest rates from a very low base, the ability for you to stimulate the economy is very limited… The bond market has already given the housing market a 1% cut over the past year and that’s helped the housing market… If the Fed is selling what they’ve done so far as insurance, and they talked about the uncertainty about what’s going on overseas, and now all of a sudden maybe you get a Brexit deal, maybe you get some sort of China truce or whatever you want to call it. Why not wait? Why not wait for December and see how things play out?”

“… Two dissents we know are already locked in and not much in the economy has really changed since the last meeting and going into the meeting in two weeks… Even (so), a rate cut is not going to matter. A rate cut is not going to offset tariffs on $360 billion worth of goods and the potential for more in December. Rate cuts from a very low level are not going to matter.”

Some excerpts from Barry James:

“I kind of look at the market today as a corn maze… You go down one and you get impeachment. You go down another and (it’s) a slowing economy, and another: Iran or China… It kinda leaves investors in a hard place… All that confusion, and yet the market is going up and the long term momentum is positive. The macro economic indicators we follow are actually starting to turn up a little bit. The raw data…, the hard data that is coming in is coming in better than expected. It’s not great, but it’s better than expected. So, all of those things would lead us to believe that there is still upside left in the market.”

It is pretty hard to see how the Fed could justify another rate cut in October under any line of thinking. Even the US dollar is now well off its highs. There is a bit more to the interview, so enjoy it above.

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