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.
Yes, the jobs report for December. Not sure how accurate that report is. Over break, my son took 2 jobs to make a little extra money. Now he's back in school and not working those 2 jobs. Anecdotal? Yes, but how many of those jobs become permanent? After 4 years of many downwardly revised jobs reports, I am skeptical or jaded.
Commodity metals closed Friday @ gold $2,690 oz
silver $ 30.97 oz
Poised to increase significantly in 2025
China is buying heavily, adding to their gold stocks.
Silver is still undervalued, due to industrial need.
No. In the mid 90's, we cut taxes, maintained growth at 4%, kept inflation under 3%, and reduced the deficit. Now interest rates were higher, so that's important.
But I think we can cut rates to stimulate growth and while it can increase inflation, it doesn't mean we'll go back to 9%. We need to reduce govt spending at the same time.
You cannot move the goalposts by combining concepts. We are talking about the impact of specific policies or decisions, individually.
Of course the Fed can change its policy in response to fiscal policy changes and offset the impacts.
I agree about the accuracy. By the time they discuss rate changes again, they will have updated the report. Unfortunately, those are going to the numbers that are traded and potentially used to change policy. If the current numbers (labor, unemployment, inflation, ect.) hold, I don't think we'll be getting a cut. Although, I'm sure the WH will be dovish.
Edit: I've mentioned this before, and it happened again yesterday. The USDA cut '24 corn production by 4 bushels. It happens at about a 95% rate. Terrible.
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But maybe policies can be put into place to apply to larger firms. Jack up tariffs, eliminate corp tax if bring back manufacturing, tax credits, all sorts of tools.
I’m a monetarist because I believe it works and functions far better than our politicians in Washington.
Last I checked there was one on the FOMC committee. They’re too busy running hedge funds these days.
The Fed is the only thing holding our economy together...with just a hammer. Some people would like to remove the hammer.
My biggest wish is that they would just keep their ^%&%$ mouth shut and do what they feel like they need to do. You can't tell me that there's not people making big money because they know way ahead of time what the Fed is gonna do.
Can the board members invest their own money or does it have to be someone else managing it (Not that the members would let the advisor know ahead of time what was gonna happen
)IDK. It's not the number but the why. Obviously because of lower input costs due to labor and regulation.
I think gold will have a good year in 25. However, it will get crushed by Bitcoin, again.
Edit: The U.S. would wise to sell their gold for Bitcoin. It would weaken China/Russian and strengthen the dollar system.
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Sounds like absolutely horrible economic policy. Full of more rent seekers, lobbyists and financial engineering via a complicated tax code. The default Republican position also now that govt knows best?
How am I moving the goalpost? And what concepts am I combining? And what specific policies and decisions are you discussing?
You said "we cannot cut taxes and stimulate / increase growth without simultaneously increasing inflation." I just pointed out a time when we did just that. 1994 included a 250B tax cut. Growth held at 4% and inflation held at 3%.
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