So, the Fed cut rates again. Big deal. Another quarter point to appease the market gods. But let's be real, is this about the economy, or is Powell just trying to keep his job?
The Fed's Tightrope Walk
Powell says "policy is not on a preset course." Right. Tell me another one. The Fed's acknowledging "downside risks to employment," but what they’re really saying is, "Trump's tariffs are screwing everything up, and we're trying to bail out his mess without looking like we're bailing him out." It's a delicate dance, I'll give them that.
And this whole thing with the government shutdown? Please. They're "relying more on high-frequency and sentiment data." Which is code for "we're flying blind." It's like trying to navigate a hurricane with a broken weather vane. How can anyone make informed decisions when the baseline data is missing? Maybe that's the point. Keep everyone guessing.
Two dissents, too? That's gotta sting. Miran wanted a bigger cut, Schmid wanted to hold steady. It's the first time since 2019 we've seen dueling dissents. They expect us to believe this isn't a sign of complete internal chaos, and honestly...
The Trump Factor
Let's not forget the elephant in the room: Trump. The Supreme Court is about to hear arguments on his tariffs and his power to fire Lisa Cook. The guy's basically holding the Fed hostage. And Treasury Secretary Bessent is already looking for Powell's replacement? Yeah, no pressure, Jerome. Cut rates, don't cut rates, just make sure you're doing what keeps the big guy happy. Ain't that the truth?
The Fed estimates tariffs make up about five-tenths or six-tenths of the core personal consumption expenditures (PCE) price index, the Fed’s main inflation gauge. So, Trump's policies are directly inflating prices, and the Fed is trying to offset that by cutting rates. It's like trying to put out a fire with gasoline.
And then there's the Supreme Court case next week regarding the legality of Trump's tariffs. This whole thing is a clusterf*, plain and simple.
The AI Mirage
Oh, and the Fed's "monitoring corporate layoffs, especially those related to AI advancements." As if that's their biggest concern. Sure, AI is changing the game, but let's not pretend it's the sole driver of economic uncertainty. Nvidia's market cap is $5 trillion, and Powell's saying it's different from the dot-com bubble because "they have earnings." Okay, boomer.
Stocks closed mixed, Treasury yields rose, and the dollar jumped. The market's as confused as I am. Are we heading for a boom, a bust, or just more sideways shuffling? Who the hell knows?
Offcourse, the Fed will keep "getting insight into the economy through sources outside of government data," but any great amount of uncertainty could affect what happens at the December meeting. Translation: "We're making this up as we go along." According to a Fed meeting recap on CNBC, another rate cut in December 'is not a foregone conclusion'.
So, What's the Real Story?
It's all political theater. Powell's trying to thread the needle, keep the markets happy, and avoid getting fired by a vindictive ex-president. The economy's a sideshow. The real question is: How long can he keep juggling chainsaws before he drops one on his foot? Then again, maybe I'm the crazy one here.
