2025 Markets
- Thread starter snarlcakes
- Start date
Hard to say with Trump coming in. But I've never thought the Fed would cut rates as quickly as many thought. I was surprised at the first 50 basis point cut. My thought was Fed would be too slow to cut and screw up the economy like it did in 2018 and 2021.
With that, I think the Fed will screw this up and not cut much in 2025. Yields will stay elevated throughout the year. Stocks will be slightly higher and inflation will decline.
Why I think that is because I think the freebies will stop, specifically student debt relief.
People says tariffs will increase inflation but Trump wants to lower the Corp tax rate, so those will offset to some extent.
Well, that's about enough. I may be 100% wrong but I don't trust the Fed. They did guide us into a soft landing so they get kudos for that. Not easy when the Biden admin keeps spending like there's no tomorrow.
Well, if he increases tariffs, why will it cause inflation? Because companies pass on the increased tariff in the form of higher prices.
If he lowers corp taxes on those tariffed goods, it provides the company the opportunity to lower prices, or offset the tariff.
Costs are costs, whether it's a tariff, corp tax, raw material, rent, payroll, etc.
LOL. Yeah, that's exactly what they will do. That might make sense theoretically, but I ain't buyin' it in the real world.
Not really equivalent. Corp taxes are only paid as a % of net earnings. A tarrifs increases cost of goods sold for everyone. Including firms that aren't even profitable and aren't paying corp taxes.
Because, IMHO, the Fed failed to take into account the fiscal spending in late 2020 and 2021 and let inflation get out of control by not raising sooner or at least eliminating QE.
So now I am not confident they will not recognize that we will or should have a more restrictive fiscal policy and not cut rates.
We'll see. I've been wrong plenty of times as my wife will attest to.
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True in general. But we don't know the tariffs, the products to be tariffed or the tax rates, so one can't say they aren't equivalent. We are discussing with a boatload of unknown variables.
At this point I’m not sure if the FED can screw it up. I’m worried about fiscal dominance. Longer term rates have increased since their latest cuts and inflation has been moving in the wrong direction for 3 months now. I’d feel a lot better if it rolled over soon. I don’t see a need for cuts currently, besides for debt purposes (which technically isn’t the FEDs job). I appreciate the answer.
Let me give you a real life example. My buddy sells on Amazon and gets his widget from China. The Trump tariffs increased his costs but he didn't think he could raise prices as none of his competitors were raising them. At the end of the year, his net income declined but now he qualified for QBI and got the 20% break. He actually made more.
So the details matter in the tariffs, the tax rates, QBI income levels and phase outs, etc.
I'm doing my own books right now and I owed 34k in taxes because I was over the QBI level. I'm setting up a cash balance plan to defer a chunk (a biz expense) and it qualifies me for QBI. Now, I am projected to get a 9k refund. Details matter.
You are saying that you're afraid they are going to cut rates even though they shouldn't be?
Sorry, that sentence was not the easiest to understand.
Yes, thank you. Watching football and on the WC is not a good combo.
Sorry. Was typing and watching football.
I'm saying I'm afraid they will be late to the cutting game like they were to the raising game.
Moreso for small and micro businesses. They are price takers, not price setters. That doesn't really apply for larger scale firms. CFOs (and equity analysts) are fixated in EBITDA and gross margins.
Did you happen to catch the jobs report today?
I agree that rates have been cumbersome for many reasons and would like to see them come down. Just ftr. And selfishly ftr.
Fed always seems to be biased towards easing more than tightening. I don't see much need for them to be cutting rates too much this year. Maybe half a point to get back closer to neutral
Are you confusing growth and inflation? They are positively correlated. You cannot cut taxes and stimulate / increase growth without simultaneously increasing inflation inflation. If aggregate demand and monetary velocity accelerate, inflation will be higher, not lower.
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