One major bank is holding the line, saying the Fed won’t cut rates this year

The no rate cut camp on Wall Street is getting more lonesome by the day, but Citi is still standing its ground. The economists at Citi maintained their call for no rate cuts this year after the Federal Reserve said the case for an easier monetary policy has strengthened, while dropping the word “patient” in its statement. “Fed policy – and our call for no cuts in 2019 – remain highly dependent on incoming data over the next few weeks,” Catherine Mann, global chief economist at Citi, said in a no


The no rate cut camp on Wall Street is getting more lonesome by the day, but Citi is still standing its ground. The economists at Citi maintained their call for no rate cuts this year after the Federal Reserve said the case for an easier monetary policy has strengthened, while dropping the word “patient” in its statement. “Fed policy – and our call for no cuts in 2019 – remain highly dependent on incoming data over the next few weeks,” Catherine Mann, global chief economist at Citi, said in a no
One major bank is holding the line, saying the Fed won’t cut rates this year Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-06-20  Authors: yun li
Keywords: news, cnbc, companies, holding, cut, major, word, wall, saying, citi, policy, line, statementfed, fed, cuts, weeks, street, bank, wont, rates, rate, strengthened


One major bank is holding the line, saying the Fed won't cut rates this year

The no rate cut camp on Wall Street is getting more lonesome by the day, but Citi is still standing its ground.

The economists at Citi maintained their call for no rate cuts this year after the Federal Reserve said the case for an easier monetary policy has strengthened, while dropping the word “patient” in its statement.

“Fed policy – and our call for no cuts in 2019 – remain highly dependent on incoming data over the next few weeks,” Catherine Mann, global chief economist at Citi, said in a note on Wednesday. “In particular at least a benign outcome at the G20 and solid payroll growth for June will be necessary for the Fed to avoid cuts in July.”


Company: cnbc, Activity: cnbc, Date: 2019-06-20  Authors: yun li
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Goldman Sachs cuts Tesla price target

Goldman Sachs slashed its price target on Tesla on Thursday and said it was expecting shares to continue to decline over concerns about demand. “Sustainable demand [is] the key question as shares [are] likely continue to de-rate,” the bank said in a note. Goldman lowered the price target to $158 from $200, which would represent a 30% drop from Tesla’s current levels based on Wednesday’s close of $226.43. “We believe a downward path for shares will resume as it becomes more clear that sustainable


Goldman Sachs slashed its price target on Tesla on Thursday and said it was expecting shares to continue to decline over concerns about demand. “Sustainable demand [is] the key question as shares [are] likely continue to de-rate,” the bank said in a note. Goldman lowered the price target to $158 from $200, which would represent a 30% drop from Tesla’s current levels based on Wednesday’s close of $226.43. “We believe a downward path for shares will resume as it becomes more clear that sustainable
Goldman Sachs cuts Tesla price target Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-06-20  Authors: michael bloom, sam meredith, fred imbert
Keywords: news, cnbc, companies, demand, continue, shares, sachs, model, goldman, sustainable, cuts, question, price, tesla, target


Goldman Sachs cuts Tesla price target

Goldman Sachs slashed its price target on Tesla on Thursday and said it was expecting shares to continue to decline over concerns about demand.

“Sustainable demand [is] the key question as shares [are] likely continue to de-rate,” the bank said in a note. Goldman lowered the price target to $158 from $200, which would represent a 30% drop from Tesla’s current levels based on Wednesday’s close of $226.43.

“We believe that is the largest question for investors to underwrite at this point — what are sustainable demand levels for the Model S, Model X, and Model 3 — and how does that change with the introduction of Model Y production,” Goldman Sachs analyst David Tamberrino said. “We believe a downward path for shares will resume as it becomes more clear that sustainable demand for the company’s current products are below expectations.”

Tesla shares are down 0.81% in premarket trading. The stock is down 30% this year as the company continues to be mired in a myriad controversies. Analysts and investors also continue to mull whether the company will need to raise more capital.


Company: cnbc, Activity: cnbc, Date: 2019-06-20  Authors: michael bloom, sam meredith, fred imbert
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Sterling slips as Bank of England cuts second-quarter growth to zero

The Bank of England held interest rates steady on Thursday amid the possibility of a no-deal Brexit still hanging over the U.K. The central bank also cut its growth forecast for Britain’s economy to zero in the second quarter of 2019, highlighting global trade risks and growing fears of a damaging no-deal Brexit. Sterling extended its losses against the euro in reaction to the news, falling 0.4% to 89.09 pence, while also falling from 1.2723 to 1.2694 against the dollar. U.K. 10-year gilt yields


The Bank of England held interest rates steady on Thursday amid the possibility of a no-deal Brexit still hanging over the U.K. The central bank also cut its growth forecast for Britain’s economy to zero in the second quarter of 2019, highlighting global trade risks and growing fears of a damaging no-deal Brexit. Sterling extended its losses against the euro in reaction to the news, falling 0.4% to 89.09 pence, while also falling from 1.2723 to 1.2694 against the dollar. U.K. 10-year gilt yields
Sterling slips as Bank of England cuts second-quarter growth to zero Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-06-20  Authors: elliot smith
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Sterling slips as Bank of England cuts second-quarter growth to zero

The Bank of England held interest rates steady on Thursday amid the possibility of a no-deal Brexit still hanging over the U.K.

The central bank also cut its growth forecast for Britain’s economy to zero in the second quarter of 2019, highlighting global trade risks and growing fears of a damaging no-deal Brexit.

Sterling extended its losses against the euro in reaction to the news, falling 0.4% to 89.09 pence, while also falling from 1.2723 to 1.2694 against the dollar.

BOE officials had previously talked of the need for higher borrowing costs in the not-too-distant future, but Governor Mark Carney announced that the central bank’s Monetary Policy Committee (MPC) had voted unanimously to hold rates at 0.75%.

U.K. 10-year gilt yields fell to a day’s low of 0.809% following the decision. The FTSE 100 extended gains, trading 0.5% higher during the afternoon session.


Company: cnbc, Activity: cnbc, Date: 2019-06-20  Authors: elliot smith
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Fed holds rates steady, but opens the door for a rate cut in the future

A divided Federal Reserve held the line on interest rates Wednesday and indicated formally that no cuts are coming in 2019. The central bank predicts one or two rate cuts in its set of economic predictions, but not until 2020. Despite cautious wording in the post-meeting statement Wednesday, markets are still betting the Fed cuts, as soon as July. The action sets up a possible confrontation between Fed Chairman Jerome Powell and President Donald Trump, who has been pressuring the Fed to cut rate


A divided Federal Reserve held the line on interest rates Wednesday and indicated formally that no cuts are coming in 2019. The central bank predicts one or two rate cuts in its set of economic predictions, but not until 2020. Despite cautious wording in the post-meeting statement Wednesday, markets are still betting the Fed cuts, as soon as July. The action sets up a possible confrontation between Fed Chairman Jerome Powell and President Donald Trump, who has been pressuring the Fed to cut rate
Fed holds rates steady, but opens the door for a rate cut in the future Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-06-19  Authors: jeff cox
Keywords: news, cnbc, companies, decision, statement, rates, economic, opens, rate, holds, future, inflation, committee, powell, cuts, cut, steady, fed, market, door


Fed holds rates steady, but opens the door for a rate cut in the future

A divided Federal Reserve held the line on interest rates Wednesday and indicated formally that no cuts are coming in 2019. The decision came amid divisions over what is ahead and still leaves open the possibility that policy loosening could happen before the end of the year depending on how conditions unfold. The central bank predicts one or two rate cuts in its set of economic predictions, but not until 2020. Despite cautious wording in the post-meeting statement Wednesday, markets are still betting the Fed cuts, as soon as July. And Powell opened the door to that possibility in a press conference following the statement, saying, “Many participants now see the case for somewhat more accommodative policy has strengthened.” In a decision closely watched by financial market participants clamoring for multiple cuts, central bank officials on the Federal Open Market Committee voted 9-1 to keep the benchmark rate in a target range of 2.25% to 2.5%, where it has been since December’s controversial quarter-point increase. St. Louis Fed President James Bullard voted to reduce the rate.

The action sets up a possible confrontation between Fed Chairman Jerome Powell and President Donald Trump, who has been pressuring the Fed to cut rates. Just Tuesday, Trump said “let’s see what he does” at the Fed meeting when asked if he still wants to demote Powell. At the post-statement news conference, Powell was asked about his future as chairman. “I think the law is clear that I have a four year term, and I fully intend to serve it,” he said. The strong majority for this month’s decision contrasted with a sharp difference of opinion on what happens next. The committee provided an important nod to those worried about slower growth: It dropped the word “patient” in describing its approach to policy. The characterization was a key part of the Fed “pivot” earlier this year that signaled to the market a more dovish approach to rates. “The Fed didn’t surprise investors with the decision to maintain rates, but the split vote tells us that a cut is on the way and it’s increasingly likely that will be in July, as bond markets have been hoping,” said Neil Birrell, chief investment officer at Premier Asset Management. “This was probably the compromise decision — it wasn’t shocking and should offer some reassurance,” Steve Rick, chief economist at CUNA Mutual Group, said in a note. “The FOMC will still want to closely monitor the stress fractures from the bond market, middling housing and auto sales numbers, and an increasingly uncertain global economic landscape in the coming months.” The statement also changed wording to concede that inflation is “running below” the Fed’s 2% objective. In their forecast for headline inflation this year, officials slashed the estimate to 1.5% from March’s 1.8%. Core inflation, which excludes volatile food and energy prices, is likely now to be 1.8% from March’s 2%, according to the quarterly summary of economic projections also released Wednesday.

‘In light of these uncertainties’

The committee changed language from its May statement to indicate that economic activity is “rising at a moderate rate,” a downgrade from “solid.” In their baseline scenario, FOMC members said they still expect “sustained expansion of economic activity” and a move toward 2% inflation, but realize that “uncertainties about this outlook have increased.” “In light of these uncertainties and muted inflation pressures, the Committee will closely monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective,” the statement said. The “act as appropriate to sustain the expansion” language mirrors a statement from Powell in early June.

The committee characterized the labor market as “strong” with “solid” jobs growth, despite May’s disappointing nonfarm payrolls growth of 75,000. The statement further said that household spending “appears to have picked up from earlier in the year.” The changes came amid what appeared to be little consensus among the committee about where rates go next.

Divided Fed


Company: cnbc, Activity: cnbc, Date: 2019-06-19  Authors: jeff cox
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Here’s what the stock market liked from the Fed

Andrew Harrer | Bloomberg | Getty ImagesThe Fed came very close to promising a rate cut Wednesday, and now markets are focused on a possible July rate cut. “The market liked it now, but it’s important to keep in mind, rate cuts are not a magic wand. She also noted that the Fed’s interest rate forecast, presented in the so-called ‘dot plot,’ also showed the Fed’s rate forecast falling from 2.6% in 2020 to 2.4%, pricing at least one rate cut. Fed officials’ interest rate forecasts are included ano


Andrew Harrer | Bloomberg | Getty ImagesThe Fed came very close to promising a rate cut Wednesday, and now markets are focused on a possible July rate cut. “The market liked it now, but it’s important to keep in mind, rate cuts are not a magic wand. She also noted that the Fed’s interest rate forecast, presented in the so-called ‘dot plot,’ also showed the Fed’s rate forecast falling from 2.6% in 2020 to 2.4%, pricing at least one rate cut. Fed officials’ interest rate forecasts are included ano
Here’s what the stock market liked from the Fed Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-06-19  Authors: patti domm
Keywords: news, cnbc, companies, liked, statement, stock, rate, cuts, markets, feds, cut, heres, market, fed, officials, interest


Here's what the stock market liked from the Fed

Jerome Powell, chairman of the U.S. Federal Reserve, speaks during a news conference following a Federal Open Market Committee meeting in Washington, D.C., on Wednesday, June 19, 2019. Andrew Harrer | Bloomberg | Getty Images

The Fed came very close to promising a rate cut Wednesday, and now markets are focused on a possible July rate cut. “I think they’re fully planning on cutting in July, absent stronger data,” said Ed Keon, QMA chief investment strategist. “The market liked it now, but it’s important to keep in mind, rate cuts are not a magic wand. There is clear evidence of weakening of economic conditions.” The Fed sent a dovish message in its statement, but even more so in its interest rate forecast, released following its two-day meeting Wednesday afternoon. After the statement, stocks and bonds flip-flopped before settling into a pattern, where both markets were bid higher on the prospect of a rate cut. Bond yields, which move opposite price, fell with the biggest decline in the 2-year yield, which closely follows Fed expectations.

The Fed’s rate policy committee left the fed funds target rate range unchanged at 2.25% to 2.50%, while it tweaked some of the language in its statement to suggest it sees more risks to the economy. It also removed the phrasing that it would be “patient,” language it added earlier this year to indicate Fed officials were willing to wait and see more information before making a rate move. Analysts focused on the fact that the Fed’s interest rate projections showed eight of 17 officials are now expecting the Fed will need to cut rates at least once this year. The fed funds futures market Wednesday afternoon moved to price in three quarter-point hikes this year, including 100% odds for a quarter-point hike this summer, according to BMO. “That was the biggest surprise in terms of the dovishness. The market was already heading in fairly dovish and everyone did anticipate them taking out the word ‘patience,'” said Leslie Falconio, senior strategist with UBS Global Wealth Management Chief Investment Office. “It was really the dot plot that came off on the dovish side.” She also noted that the Fed’s interest rate forecast, presented in the so-called ‘dot plot,’ also showed the Fed’s rate forecast falling from 2.6% in 2020 to 2.4%, pricing at least one rate cut. Fed officials’ interest rate forecasts are included anonymously in the dot plot, which literally is a chart. “They’re setting us up for a rate cut, but who knows when,” said Peter Boockvar, chief investment strategist at Bleakley Advisory Group. “If the data weakens, they’ll cut in July. If it stays steady or gets better, they won’t. People should understand if they’re going to cut it’s because the market data got worse. … This is showing the market focus is on the cuts but not on the reason for the cuts.” While the markets took the Fed as dovish and ready to move, some economists stuck with their forecasts for no cuts. “The market reacted dovishly to the June FOMC, in part reacting to 8 dots showing cuts in 2019 and 7 of these indicating 50 [basis points] of cuts,” Citigroup economists wrote. “While the statement and dots keep cuts as early as July squarely on the table, the outcome is very close to our expectations and does not change our base case for no cuts in 2019 — which also remains the base case of a slim majority of Fed officials.” But John Briggs, head of strategy at NatWest Markets, said the Fed should already have cut and that it loses control of the narrative around the rate cut if it waits.


Company: cnbc, Activity: cnbc, Date: 2019-06-19  Authors: patti domm
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Traders are pricing in a 100% chance of at least one Fed rate cut in July

Traders are convinced the Federal Reserve will cut rates next month. The Fed decided to keep the benchmark rate in a target range of 2.25% to 2.5% Wednesday. Along with that forecast, comments from Fed’s Powell and a tweak to the central bank’s statement caused traders to increase bets a cut is coming. “The Fed has clearly opened the door to a rate cut,” said Robin Anderson, senior economist at Principal Financial Group. Before the Fed announcement on Wednesday, traders were pricing in a 16% cha


Traders are convinced the Federal Reserve will cut rates next month. The Fed decided to keep the benchmark rate in a target range of 2.25% to 2.5% Wednesday. Along with that forecast, comments from Fed’s Powell and a tweak to the central bank’s statement caused traders to increase bets a cut is coming. “The Fed has clearly opened the door to a rate cut,” said Robin Anderson, senior economist at Principal Financial Group. Before the Fed announcement on Wednesday, traders were pricing in a 16% cha
Traders are pricing in a 100% chance of at least one Fed rate cut in July Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-06-19  Authors: yun li
Keywords: news, cnbc, companies, policy, pricing, statement, rates, chance, rate, cuts, cut, 100, fed, tool, traders


Traders are pricing in a 100% chance of at least one Fed rate cut in July

Traders and financial professionals work on the floor of the New York Stock Exchange.

Traders are convinced the Federal Reserve will cut rates next month.

The fed funds futures market is now pointing to a 100% chance of an easing of monetary policy next month — a 67% chance of one rate cut to 2% to 2.25% range, a 31% probability of two cuts and 2% of three cuts in July, according to the CME FedWatch tool. The tool is based on futures pricing from live markets and reflect the views of traders placing real bets on the CME exchange.

The Fed decided to keep the benchmark rate in a target range of 2.25% to 2.5% Wednesday. The Fed’s so-called dot plot shows that policy makers are divided for the remainder of this year, with eight members favoring one cut this year while the same number voted in favor of the status quo and one still wants a rate hike.

Along with that forecast, comments from Fed’s Powell and a tweak to the central bank’s statement caused traders to increase bets a cut is coming. Fed chair Jerome Powell said at a press conference Wednesday the case for more accommodative policy has strengthened, adding that policymakers are concerned about some of the recent economic developments. And the Fed dropped the word “patient” from its statement.

“The Fed has clearly opened the door to a rate cut,” said Robin Anderson, senior economist at Principal Financial Group. “The Fed is going to do what it can to maintain the current economic expansion, and the shift in language used in today’s statement makes it clear that we’ll see at least one rate cut this year, potentially two.”

Before the Fed announcement on Wednesday, traders were pricing in a 16% chance that the central bank would keep the rates unchanged in July, while seeing a 65% chance of one cut and a 19% chance of two cuts next month.


Company: cnbc, Activity: cnbc, Date: 2019-06-19  Authors: yun li
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The Fed is ‘carefully’ laying the groundwork for a rate cut this year, analysts say

The Federal Reserve’s language indicates the central bank could be laying the groundwork for an interest rate cut in July or later this year, analysts told CNBC on Wednesday. The central bank predicted one or two rate cuts but not until 2020. David Kelly, chief global strategist at JPMorgan Funds, agreed a rate cut is on the table for later this year. But Kelly said he’s concerned rate cuts could actually harm the economy instead of help as people hold out for lower rates. So, people will just b


The Federal Reserve’s language indicates the central bank could be laying the groundwork for an interest rate cut in July or later this year, analysts told CNBC on Wednesday. The central bank predicted one or two rate cuts but not until 2020. David Kelly, chief global strategist at JPMorgan Funds, agreed a rate cut is on the table for later this year. But Kelly said he’s concerned rate cuts could actually harm the economy instead of help as people hold out for lower rates. So, people will just b
The Fed is ‘carefully’ laying the groundwork for a rate cut this year, analysts say Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-06-19  Authors: berkeley lovelace jr
Keywords: news, cnbc, companies, policy, kelly, rate, groundwork, say, carefully, economy, cuts, cut, fed, central, bank, laying, think, analysts


The Fed is 'carefully' laying the groundwork for a rate cut this year, analysts say

The Federal Reserve’s language indicates the central bank could be laying the groundwork for an interest rate cut in July or later this year, analysts told CNBC on Wednesday.

They spoke shortly after the Federal Open Market Committee voted 9-1 to keep the benchmark rate in a target range of 2.25% to 2.5%, sending U.S. stocks higher in midafternoon trading.

The central bank predicted one or two rate cuts but not until 2020. However, the committee in its post-meeting statement scrapped the word “patient” to describe its approach to policy, possibly indicating the central bank could be ready to cut as soon as July, analysts said.

“What you’re seeing today is the kind of careful laying of the groundwork” for an easing in monetary policy, John Bellows, portfolio manager at Western Asset Management, said on “Power Lunch. ” “I think that’s bond positive, I think that’s equity positive, and we’ll see how this plays out.”

Bellows added the Fed is also being cautious about appearing to counteract trade policy out of the White House.

With signs of a slowing economy and concerns about the U.S.-China trade war, talk in the markets earlier this year about the Fed holding steady for a while has turned to calls for a cut or even multiple cuts in 2019.

David Kelly, chief global strategist at JPMorgan Funds, agreed a rate cut is on the table for later this year. But Kelly said he’s concerned rate cuts could actually harm the economy instead of help as people hold out for lower rates.

“I think we’re in some dangerous territory here,” Kelly told “Power Lunch.” “If they cut in July, everybody is going to expect them to cut again. … So, people will just build in a series of rate cuts and as rates fall people will [say], ‘Why don’t I just wait awhile here, see if I can borrow at cheaper rates.”

However, conservative economic pundit Stephen Moore, who withdrew his bid to be appointed to the Fed in May, thinks the central bank made a mistake on Wednesday by not cutting rates.

“There is no whiff of inflation anywhere in the economy. If anything, the problem is falling prices. The Fed should get ahead of the curve of that,” Moore, a visiting fellow at The Heritage Foundation think tank, said on “Closing Bell. ”

“They should have cut rates by 25 basis points and reversed the mistake they made back in December,” he added. “I view this as, kind of, an anti-growth move by the Fed.”

— CNBC’s Michelle Fox, Matthew Belvedere and Jeff Cox contributed to this report.


Company: cnbc, Activity: cnbc, Date: 2019-06-19  Authors: berkeley lovelace jr
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Rate cuts won’t boost the stock market, UBS says: ‘The Fed put is dead’

Investors seem to think if there’s a rate cut by the Federal Reserve, stocks will automatically rally. “When it comes to U.S. stocks, the Fed put is dead,” UBS equity strategist Francois Trahan said in a note on Monday. “In the past 20 years, the so-called ‘Fed Put’ has failed to revive equities the way rate cuts did in the 1990s. The market has been increasingly betting on a rate cut ever since Fed chair Jerome Powell said the central bank will “act as appropriate to sustain the expansion. ” Fe


Investors seem to think if there’s a rate cut by the Federal Reserve, stocks will automatically rally. “When it comes to U.S. stocks, the Fed put is dead,” UBS equity strategist Francois Trahan said in a note on Monday. “In the past 20 years, the so-called ‘Fed Put’ has failed to revive equities the way rate cuts did in the 1990s. The market has been increasingly betting on a rate cut ever since Fed chair Jerome Powell said the central bank will “act as appropriate to sustain the expansion. ” Fe
Rate cuts won’t boost the stock market, UBS says: ‘The Fed put is dead’ Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-06-18  Authors: yun li
Keywords: news, cnbc, companies, market, dead, rate, boost, sp, stock, ubs, stocks, cut, fed, cuts, equities, wont, traders, economy


Rate cuts won't boost the stock market, UBS says: 'The Fed put is dead'

Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., May 30, 2019.

Investors seem to think if there’s a rate cut by the Federal Reserve, stocks will automatically rally. That may not be the case.

That’s the message from UBS ahead of the Fed’s policy decision on Wednesday. Traders are betting that the central bank would deliver an easing of monetary policy soon to provide the economy with some insurance and hence boosting stocks, but UBS believes such a move would do little to lift the market.

“When it comes to U.S. stocks, the Fed put is dead,” UBS equity strategist Francois Trahan said in a note on Monday. “In the past 20 years, the so-called ‘Fed Put’ has failed to revive equities the way rate cuts did in the 1990s. The two easing cycles of this millennium took place amidst severe declines in equities.”

The correlation between the S&P 500’s price-to-earnings ratio and the fed funds rate has broken due to the long period of low rates since the early 2000s, UBS noted. When the Fed slashed rates in 2001 and 2008 to salvage the economy from recessions, U.S. equities did not rally following the rate reductions. In fact, the S&P 500 fell as much as 16% in the 12-month period after the cuts, the bank pointed out.

The market has been increasingly betting on a rate cut ever since Fed chair Jerome Powell said the central bank will “act as appropriate to sustain the expansion. ” Traders are now pricing in a 20% chance of a rate decrease on Wednesday and a nearly 90% of at least one cut in the July meeting, while a September cut is almost a done deal, according to the CME FedWatch tool.

Meanwhile, stocks have fully come back from the May turmoil with the S&P 500 up more than 16% so far this year and about 1% from its all-time high hit in late April.

Unlike in the 1990s when the S&P 500 price to earnings responded to the interest-rate changes, now they are behaving “very cyclical,” meaning being driven by leading economic indicators, UBS said.

“This does not bode well for equities as it suggests that P/Es will likely continue to compress as long as leading indicators of the economy continue to slow. Fed rate cuts are unlikely to change any of this in the near term,” Trahan said.

Contrary to the market’s expectations, UBS is in the no-cut camp as it doesn’t think the economic data have been weak enough.

— CNBC’s Michael Bloom contributed to this report.


Company: cnbc, Activity: cnbc, Date: 2019-06-18  Authors: yun li
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One group of stocks has been a surefire winner when the Fed cuts interest rates

Jerome Powell, Chair, Board of Governors of the Federal Reserve speaks during a conference at the Federal Reserve Bank of Chicago on June 4, 2019 in Chicago, Illinois. Many investors believe the Federal Reserve is set to start cutting interest rates, possibly as early as this week. And history shows one group of stocks stands out as an outperformer after the Fed begins cutting. Health care stocks outperform the market by about 7% in the nine months following a rate cut, data compiled by Barclays


Jerome Powell, Chair, Board of Governors of the Federal Reserve speaks during a conference at the Federal Reserve Bank of Chicago on June 4, 2019 in Chicago, Illinois. Many investors believe the Federal Reserve is set to start cutting interest rates, possibly as early as this week. And history shows one group of stocks stands out as an outperformer after the Fed begins cutting. Health care stocks outperform the market by about 7% in the nine months following a rate cut, data compiled by Barclays
One group of stocks has been a surefire winner when the Fed cuts interest rates Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-06-18  Authors: fred imbert
Keywords: news, cnbc, companies, market, federal, rate, surefire, reserve, performance, stocks, shows, winner, fed, cuts, ratecutting, group, interest, rates


One group of stocks has been a surefire winner when the Fed cuts interest rates

Jerome Powell, Chair, Board of Governors of the Federal Reserve speaks during a conference at the Federal Reserve Bank of Chicago on June 4, 2019 in Chicago, Illinois.

Many investors believe the Federal Reserve is set to start cutting interest rates, possibly as early as this week. And history shows one group of stocks stands out as an outperformer after the Fed begins cutting.

Health care stocks outperform the market by about 7% in the nine months following a rate cut, data compiled by Barclays shows. And what makes the group special relative to other groups is its consistency of performance following eases.

The firm ran deep analysis on Fed rate cut cycles and found that overall market performance and performance of most sectors varies depending on why the central bank is cutting rates. Barclays determined there were two types of rate-cutting environments: an economic “soft patch” and a recession. Health care was the only sector that thrived in both those rate-cutting scenarios.


Company: cnbc, Activity: cnbc, Date: 2019-06-18  Authors: fred imbert
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A Fed rate cut should boost stocks as long as the economy is experiencing just a ‘soft patch’

Strategists refer to this as an “insurance” rate cut. However, the S&P 500 averages a loss of about 17% when the Fed cuts rates because of what turns out to be a recession. Market expectations for a rate cut in July stood at 84.3% on Monday, according to the CME Group’s FedWatch tool. Traders have also priced in a 51.9% chance of a third rate cut in December. Jim Grant, editor of the Grant’s Interest Rate Observer newsletter, told CNBC’s “Squawk Box ” the Fed will cut rates at this week’s meetin


Strategists refer to this as an “insurance” rate cut. However, the S&P 500 averages a loss of about 17% when the Fed cuts rates because of what turns out to be a recession. Market expectations for a rate cut in July stood at 84.3% on Monday, according to the CME Group’s FedWatch tool. Traders have also priced in a 51.9% chance of a third rate cut in December. Jim Grant, editor of the Grant’s Interest Rate Observer newsletter, told CNBC’s “Squawk Box ” the Fed will cut rates at this week’s meetin
A Fed rate cut should boost stocks as long as the economy is experiencing just a ‘soft patch’ Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-06-17  Authors: fred imbert
Keywords: news, cnbc, companies, cuts, stocks, economy, rates, rate, experiencing, boost, cut, think, market, patch, long, economic, fed, soft, central


A Fed rate cut should boost stocks as long as the economy is experiencing just a 'soft patch'

The Federal Reserve is expected to cut interest rates multiple times this year, but the economic backdrop driving those cuts could have vastly different implications for the stock market, history shows.

And unfortunately for stock investors trying to bet on the outcome, that driver is not always clear when the central bank embarks on a rate-cutting cycle.

“Broad equity index performance after the start of Fed rate cuts depends on whether the economic slowdown was a soft patch or a more severe economic downturn,” wrote Maneesh Deshpande, head of U.S. equity strategy at Barclays, in a note last week.

Data compiled by Barclays shows the S&P 500 rises more than 21% a year after the central bank cuts rates as a hedge against what turns out to be a soft patch in the economy. Strategists refer to this as an “insurance” rate cut.

However, the S&P 500 averages a loss of about 17% when the Fed cuts rates because of what turns out to be a recession.

“The previous two times the Fed cut rates for the first time in 2001 and 2007, we saw stocks eventually get cut in half,” Ryan Detrick, senior market strategist at LPL Financial, said in a post. “But the reality is if you go back further in time, you can also see explosive rallies after that first cut.”

Wall Street will get clues on where the Fed stands on the economy and monetary policy on Wednesday after the central bank concludes a two-day policy meeting. A few economists and investors even think it’s possible the central bank cuts this week. The Fed meeting comes amid worsening economic data and fears that the ongoing U.S.-China trade war is weakening the global economy. But it’s not clear whether it’s a soft patch or not. Barclays’ Deshpande said recent sector performance points to the former.

Manufacturing activity grew at its slowest pace since October 2016 last month. Meanwhile, jobs creation slowed to just 75,000 in May, widely missing expectations. The U.S. economy is also seen as growing by 2.1% in the second quarter, more than a full percentage point below the first quarter.

Meanwhile, China and the U.S. have yet to strike a trade deal. Commerce Secretary Wilbur Ross also said Monday that President Donald Trump would be “perfectly happy ” to slap additional tariffs on Chinese goods.

This has sent expectations of looser monetary policy surging. Market expectations for a rate cut in July stood at 84.3% on Monday, according to the CME Group’s FedWatch tool. Bets for another rate cut in September were at 65%. Traders have also priced in a 51.9% chance of a third rate cut in December.

Some even think the Fed could start cutting rates even earlier. Jim Grant, editor of the Grant’s Interest Rate Observer newsletter, told CNBC’s “Squawk Box ” the Fed will cut rates at this week’s meeting. Diane Swonk, chief economist at Grant Thornton, thinks the Fed should cut rates this week.

But David Lafferty, chief market strategist at Natixis Investment Managers, thinks the market is pricing in too many rate hikes.

“I think the Fed wants to stay on hold, maybe even cut rates once, but I don’t think the Fed wants to go anywhere near what the market is pricing in right now,” Lafferty said. Two or three cuts, “that’s a Fed in full retreat. That is the Fed telling you a recession is coming. If the Fed can stay on hold or even give the market a taste of what it wants, without going into full retreat, that would be supportive for stocks.”

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Company: cnbc, Activity: cnbc, Date: 2019-06-17  Authors: fred imbert
Keywords: news, cnbc, companies, cuts, stocks, economy, rates, rate, experiencing, boost, cut, think, market, patch, long, economic, fed, soft, central


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