Rate Cuts Are Coming… Here’s Why That’s Bad News for YOU

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Happy Fed Day. Yep, we got the dual, dual mandate disaster. My clockwork. I do regular radio interviews with the great hosts around the country. been doing them for years. So going back a couple decades. And when this time comes around, Federal Reserve, again, that’s every single time asking questions about what I think, what the Fed is going to do, how many times, what does it mean? And I’m gonna…

Again, I want to break this down. I’ve done it before on the program, but I think it’s important because again, the media doesn’t do a very good job explaining it. Everybody out there that thinks the Federal Reserve controls interest rates, controls your mortgage rates, for example, or your credit card rates, you’re mistaken. They don’t. It’s the overnight lending rate that they have control. Now, do they have sway over those? Yes, but

Without a doubt, the rates that you pay are most certainly determined by the market. You can take a look at the tenure as of late, tenure treasury, which again, a lot of the lending rates will follow in suit. You can take a look at recently, it’s dipped below 4 % on the tenure. Now, have mortgage rates come down? Yeah, they have.

But if you think, again, you think we’re gonna see anything like we did during COVID with super low rates, if we see something like that, then we got bigger problems, okay? We got COVID-esque type of problems, if that’s the case. The Fed has this thing, it’s called a dual mandate. And again, I’ve been perfectly clear about dual mandates and anything.

goes back to that word priority that I’ve talked about. You cannot have priorities. You have to have a priority. last head of the Fed that actually held true to the true priority, which was inflation, you have to go back to Paul Volcker. Today, people look at him as this great Fed leader, great leadership that he had. You want to go back in time.

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Hated him. Okay, this was in the early parts of the Reagan administration. And I want to remind everybody, I mean, he engineered a recession. He thinks possible today. Do think Jay Powell could go out in front of a camera or you see him when he stands next to Donald Trump and said, now, Mr. President, know, interest rates, we’ve got too high inflation, interest rates are going to have to go way up. And you know what if it causes

Causes a recession causes a recession. Trump would have him removed like this. You know it and I know it. But again, taking your medicine.

Taking your medicine is important. You might not like taking your medicine. You might not like doing what the doctor is telling you to do, but you have to do it. Say you hurt your back or something like that and you need to get better. And the doctor says, well, you gotta go see a physical therapist. The physical therapist puts you through all of these exercises and things you have to do. You can either do them or not do them. You might not want to do them, but if you wanna get better, you better do them.

In my opinion, the Fed should not be lowering rates. We don’t have any sort of framework or rules to anything. How long have we been told that the Fed’s target rate is 2 %? And they continue to put that out there. We all know that’s complete and utter BS.

Because the, you take a look at the latest numbers, CPI numbers at 3%, 50 % higher than the Fed’s preferred rate and they are going to be lowering interest rates. This is the problem. This gets to the dual mandate problem. What is their other mandate? Full employment.

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concerned about the job market. This is just recent layoff announcements. UPS 48,000 workers. But again, the UPS story has also a lot to do with that nonsensical union contract that they signed off on. Amazon right now is at what 14,000 and I’m hearing it’s gonna be another 15. Another 15,000 in January. The 30,000 number was too big of a, too big of a,

pill for the media and the economy to swallow. So they’re going to do it in two stages. That’s what I’m Intel 24,000 employees, Nestle 16,000 Accenture 11,000 Ford 11,000 Nova Nordis 9,000 Microsoft 7,000 PWC 5600 Salesforce 4,000 Paramount 2000. But I think that I think that’s more as of today. Target 1800. I can go on down the list. These are big companies.

These are big companies. And again, we talk about the adjustment with AI and yeah, that’s playing a part of it. is. But there’s more to it than that. It’s not just looking at big businesses. You also have to take a look at the strength of smaller businesses around the country. If you don’t think that the tariffs have taken a bite, you’re wrong. They have. They’ve taken

a major bite. You know, you’ll see, you’ll see a story, I’ll put it out there, they’ll say, you General Electric has opened up a, you know, appliance plant and you can thank tariffs for that. Okay, how many jobs, how many jobs did that, that appliance factory, you know, how many jobs are there compared to how many are lost elsewhere?

And again, they never talk about that and the other effects that have to do with some of the policies coming out of Washington, D.C. Take that put aside. Let’s get back to the Federal Reserve. The Fed is basically saying we can’t do much when it comes to inflation. That’s what they’re doing.

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lowering rates, which I think they’re going to do and then they’re going to continue to do they’re obviously going to be focused on, you know, getting that economy grooving again, if you will. Also, it’s going to be hopefully they’re hoping that overall, you know, bank mortgage rates will come down or help that aspect of the economy, which is weakening there. Again, the old extended pretend we’re talking about a lot of the bad paper in particular in regards to commercial paper around the country.

talked about private equity, also private credit as well, that a lot of it is on, you know, basically hanging on to a life preserver. This, again, it’s not like it’s not going to continue to hang on to a life preserver, but allow them to hang on a little bit longer. Sometimes it’s kind of, again, letting things go through the system a little bit slower than they actually should. With that being said, the value, the value of your hard earned dollar,

okay, is going backwards. It’s been going backwards. It’s going to continue to go backwards. Taking a look, the stock market and how it has performed again, got some great earnings numbers in particular in regards to tech and some of the deals that have been done, but they’re most certainly waiting, waiting on the Fed to get rates down, which makes it even more attractive. For again,

30 years here at Markowski Investments. We have been banging the drum and pushed me to understand the importance of having your money working for you.

Cash is trash. It’s been trash for decades.

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Cash has been trash for decades. And you don’t believe me, go take a look. Go take a look at what one could get from a bank or even take a look at what the US government was paying in rates back in the late 1990s into 2000. Five and a half, six percent.

And that’s without your dollar being devalued. What can you get today with your dollar being devalued?

Again, you go out, you go out and you purchase, you you go out and purchase government bonds. You go out there, you know, purchase yourself, you know, a 10 year and pay in a little under 4%, for example.

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whatever you have coming in is basically going away in regards to your buying power. What’s the point?

What’s the point? It’s a very difficult environment, my friends. We don’t have a Federal Reserve that is concerned anymore when it comes to sound money. And they haven’t for some time. My concern is Ben for some time. And it’s not just dealing with Jay Powell. You can go down the list of going all the way back to Alan Greenspan, Ben Bernanke. Yeah, there’s politics involved in what?

They do. Volcker was the right guy at the right time. Do I think we’re going to get somebody like Volcker to come in and finally stamp out inflation? No, I don’t see that happening. I don’t. I don’t see that happening. So again, this is the terrain. This is what you’re dealing with. Yeah, you’re going to have all the media focused on what’s going on with the Fed. What does it mean? I’ll tell you what it means. OK, you better have your money working

very very hard for you because you’re not you’re going to be losing it. No not Argentina losing it, no not Turkish Lira losing it, but still losing it. Your buying power is going to continue to go away. Watchdog on wallstreet.com