Listening to the Fed: Making Sense of the Rate Cut

Published on
August 1st, 2019
Duration
16 minutes


Listening to the Fed: Making Sense of the Rate Cut

Trade Ideas ·
Featuring Tony Greer

Published on: August 1st, 2019 • Duration: 16 minutes

Tony Greer, editor of the Morning Navigator, breaks down why the FOMC decided to cut interest rates for the first time in a decade. Greer reviews why he is actually on board with the 25 basis-point cut, and discusses how traders should position themselves in the weeks and months to come, in this interview with Jake Merl. Filmed on the afternoon of July 31, 2019.

Comments

Transcript

  • fT
    forecast T.
    4 August 2019 @ 23:48
    3 month 10 year spread is the inversion number to watch. Or is this another methodology? I've heard 2 year and 10 year as the inversion signal.
  • PP
    Patrick P.
    4 August 2019 @ 00:52
    14:28 of the video....."The Transport side of the economy is booming again" ....Really Tony? I'm missing something.
  • wj
    wiktor j.
    2 August 2019 @ 11:23
    The ONLY way this will play out is if the fed is going to keep interest rates high and the capital flows will encrease from other parts of the world. This will ofc trigger an even stronger dollar etc. So Bottom line is buy stocks because the rest of the world will decline. At some point the dollar will decline as well. Then switch to gold, silver and cryptoes.
  • JA
    James A.
    2 August 2019 @ 10:26
    Tough crowd here! Judging his call 2days in vs a Trump tweet led sell-off is damn harsh. He's out there sticking his neck out giving a view with decent rationale. Sometimes they dont work, sometime they do. Id back him vs most of the naysayers on here. J
    • DH
      Daniel H.
      2 August 2019 @ 20:06
      On Twitter he was very arrogant about disagreeing with the TLT short. "Leave this to the professionals." But trading ain't beanbag. Ms. Market humbles all of us.
    • JA
      James A.
      3 August 2019 @ 07:22
      Right. Probably not the best choice of words retrospectively.
    • DS
      David S.
      4 August 2019 @ 20:19
      Money is made on many tweet. Unfortunately I am not in the tweet-inner circle. DLS
  • RM
    Robert M.
    2 August 2019 @ 02:51
    Nice enough guy but your track record leaves a lot to be desired. Doing the opposite of your recommendation. Paid off in January when you recommended shorting, imagine it will again now. Long TLT and SPY and QQQ Puts.
  • EC
    Earl C.
    2 August 2019 @ 02:42
    Agree with comments stated below. I realize the coal industry is now a tiny section of US economy but with all the support of the current administration a 1200 employee's underground coal miners in WV, VA. KY & strip mines in WY. had their paychecks bounce. I am seeing stress in my local economy. https://www.wymt.com/content/news/Editorial--513468621.html
  • DH
    Daniel H.
    2 August 2019 @ 00:09
    A week or so ago, Jawad Mian said to sell TLT or at least buy USO. So far that has not aged well. Perhaps they are just early, but the global economy is weakening, and seasonality is now negative for oil. He sounds like a stock bull playing with shorting bonds.
    • DH
      Daniel H.
      2 August 2019 @ 00:13
      I should add that someone argued with Jawad, and Tony said to leave this trade to the professionals. If he was in IEF, he should have gotten his professional trade stopped out today.
  • EF
    Eric F.
    1 August 2019 @ 23:35
    A BTFD opportunity - at these levels, in these circumstances? No fucking way.
  • DC
    D C.
    1 August 2019 @ 22:41
    Guys under 30 have never seen a recession. What a phase transition that will be in their minds when that happens.
    • DR
      David R.
      2 August 2019 @ 22:01
      98% of them will lose their jobs in the coming crash. 95% of those will never work in the industry, ever again. Having been in this since 1972, I've seen it happen four times. Five, soon.
  • GC
    George C.
    1 August 2019 @ 22:40
    "Seems like"? Right? Could care less who agrees with the Fed. Or not. Only question is, what are the implications for investors? Have no confidence any sound insights were garnered from this interview. Mere guesswork, it seems.
    • DC
      D C.
      1 August 2019 @ 22:55
      No certainties in the market.
  • DD
    Dominik D.
    1 August 2019 @ 21:37
    props to Real Vision & Tony for trying to bring out quick Trade Ideas like this (despite Trump's tweet stopping it out)
  • F
    Floyd .
    1 August 2019 @ 18:23
    Looks like tony was already stopped out,thank s to trump and tariffs.
  • LP
    Lauri P.
    1 August 2019 @ 18:09
    Coming out of the 'recession watch'... seems like the idea is basically trying to pick pennies in front of a steamroller.
    • EF
      Eric F.
      1 August 2019 @ 23:34
      Agreed Lauri. I think this was a poor video and today’s price action shows everything is not as good as Tony would have us believe.
    • JF
      John F.
      2 August 2019 @ 01:30
      Very true.
  • JD
    John D.
    1 August 2019 @ 17:52
    I appreciate the explanation of all the moving parts that went into the rate change and the perspective on the recession. Timely too.
  • RM
    Russell M.
    1 August 2019 @ 17:38
    He reminds me of Tony Stark:) Common sense analysis. Don't agree on Treasuries though.
  • SA
    Stephen A.
    1 August 2019 @ 17:11
    Is Tony trying to get nominated to one of the open FOMC positions?
  • JH
    Jesse H.
    1 August 2019 @ 11:58
    Sorry, but didn’t find this very useful and respectfully disagree with the read of the larger context at work - US economy is not nearly as strong as is implied here, and Fed did not truly stick to “one and done” approach, but rather FOMC stated that they would pursue further accommodation if necessary “to sustain the expansion.” At this point in the cycle, when it’s turning as it is, and there are various sizeable risks, both in the US and globally, we need an investor’s perspective here rather than looking at things in a short-term way. Otherwise, we fail to see the big risks in the markets (and opportunities). And what’s more, traders cannot react even remotely close to the speed of the Algos in a reflexive selling situation. Stop losses, which I’m sure Tony knows much more about than I do, are incredibly important if you’re going to trade right now. Trading to me right now feels like a surfer trying to catch a tsunami. Unless you really know what you’re doing, some folks in the markets (actually, probably a lot of people, sadly) are about to get very hurt (significant risk of permanent impairment of capital). Cheers.
    • ii
      ida i.
      1 August 2019 @ 12:49
      how can someone simply saying what they think and exposing themselves to criticism not be useful? it doesn't matter if we agree, what counts is understanding different points points of view cheers
    • DS
      David S.
      1 August 2019 @ 16:56
      Jesse H. - I agree with your comments. I also believe that RVTV did respond to your concerns in the Recession Series. Mr. Ollari pointed out that the market has not reflect what is happening in the economy for a long time. The market reacts in a knee-jerk fashion to each news bit that comes along “as if the markets were correctly priced the night before” – Algo, psychological trading and carry trade from negative interest rates. This video is trying to explain how the market reacts moment by moment; not the existential threat that clearly exists. The fact that the DOW is up almost one percentage point this morning shows the market and the economy are surely disconnected. You are correct that some day the market will better reflect the actual economic conditions. The Fed has no control at the lower bound with a debt-ridden economy. It is just trying to provide liquidity. DLS
  • DL
    David L.
    1 August 2019 @ 11:46
    I primarily enjoy RV's broad view of the markets and economy, but also appreciated this timely commentary on the Fed's action. Perhaps rapid responses to major events could become an ongoing feature. Admittedly, only time will tell if the rate cut will constitute a "major event", but it has certainly occupied a lot of mental bandwidth over the last week or so.
  • SW
    Scott W.
    1 August 2019 @ 11:44
    TG, why do you state that if the stock market falters, the Fed have to cut rates?
    • TG
      Tony G. | Contributor
      1 August 2019 @ 13:27
      I think they'll use Fed Funds lower as ammo against an equity tumble. If that helps?
    • SW
      Scott W.
      1 August 2019 @ 15:02
      Perhaps I took that particular statement out of context. If the dollar was relatively stable and economic conditions were generally stable/positive and the yield curve was "reasonable" given where we are, but equities nosed over, do you suppose the Fed would cut on that alone? That would seem to signal a capitulation to Trump and would provide ammo to Fed detractors that it's not an independent data-driven entity, or that it doesn't seek to fulfill only its (stated) mandate. And again, perhaps I'm hung up on semantics. Appreciate your thoughts!
    • DS
      David S.
      4 August 2019 @ 20:29
      Scott W. - The Fed just cut a quarter of a percentage point and will stop decreasing their B/S after August. The economic conditions did not indicate a rate cut, but they did. This cut shows the Fed's willingness to provide liquidity to the markets - an additional unspecified mandate. DLS
  • ii
    ida i.
    1 August 2019 @ 11:00
    thank you for being really fast with this comment, in real time practically
  • JR
    J R.
    1 August 2019 @ 09:06
    Appreciate the view Tony. Very timely.
  • DS
    David S.
    1 August 2019 @ 08:07
    I feel the Fed knows that it has no effect on the economy this close to the zero bound. It is reasonable that the Fed’s reduction in rates is providing liquidity to the markets and a response to the carry trade from Europe. Investors can borrow at German negative rates and invest in higher US treasury bonds and make a simple arbitrage profit. European pension funds, if covenants allow, can do the same. DLS
  • RS
    Ruben S.
    1 August 2019 @ 07:55
    Thx for the quick reaction to the fed Tony. Do you really see higher rates AND higher stocks? As it seems to me stocks went up from January ONLY because market started to price cuts... do you agree?
    • TG
      Tony G. | Contributor
      1 August 2019 @ 13:28
      I do see a reflexive rebound in yields (higher) happening next within this down trend. Tough to tell why stocks went up since January aside from the dovish posture and good earnings?
  • DS
    David S.
    1 August 2019 @ 07:47
    It is interesting that the Fed lowered by 0.25 percentage points and eliminated the runoff of the balance sheet by the end of August instead of September. Eliminating the September runoff is just a little sweetener and shows that they will try to be accommodative with liquidity. This is the most they could have done and still appear to be a little independent. DLS
  • IH
    Iain H.
    1 August 2019 @ 07:02
    Thanks Tony. Nicely concise and clear opinion.
    • TG
      Tony G. | Contributor
      1 August 2019 @ 13:28
      Thank you.