A Major Shift For The Federal Reserve (Radio Interview)

December 9, 2019

On the Trey Ware Show, Karl Eggerss discussed how the halt in interest rate hikes by the Fed and the massive reversal which led to 3 interest rate cuts in 2019 has really been the fuel behind the rally.  A good economy hasn’t hurt either.

Trey Ware:                         The Bureau of Labor Statistics, the number of jobs added in October, September’s jobs report up. And in November, 266,000 jobs created in November. That shocked the people who are following this in The Economist. We thought it was going to be … They thought it was going to be right around 120, 150 something like that. It came out to be 266,000.. But here’s where it gets even better. Unemployment, the lowest in 50 years. Black unemployment, the lowest ever. Female unemployment, the lowest ever. Asian unemployment, the lowest ever. Hispanic unemployment, the lowest ever. But here’s where it gets even better. Oh yeah. Can you stand more good news? Wages up higher. 3.1% year-to-year on wage growth. That’s part of controlling the border. When you have fewer people competing for the same jobs. And for the sixth month in a row, record number of Americans counted as employed. 158, 593,000 Americans working in November, the 24th record of Trump’s presidency.

The unemployment rate dropping to the lowest that we’ve had in 50 years. I’m 56. This is the best economy in my lifetime. Now, a study come out from Fidelity Investments saying that people are now saving more than they ever have. Nearly 80% of respondents say that they’re going to be better off next year, that they’re very confident about that. The top reason Americans feeling optimistic is because of the job situation in our country right now, which is driving consumer spending. We could not be in a better position going into the holiday shopping year for consumer spending than we are right now with all these great economic numbers that are out. With his thoughts about it, creatingricherlives.com man, Karl Eggerss is joining me now on the Stevens Roofing Newsmaker hotline. So all that info right there, Karl, what are your thoughts about all that?

Karl Eggerss:                      Well, I’ll give you one more if you think this is good news, which is over the weekend, China came out with their export numbers, meaning how much stuff do they send out of their country. And it was much lower than expected, which means the tariffs are hurting them. And so again, they need this deal, this trade deal with the US more than the US does, which is why you see Trump occasionally say, “Maybe we’ll wait. Maybe we’ll wait until after the election and see how it goes.” And then what happens? A couple of days later, there’s some talking underneath the surface and then lo and behold, we get more positive trade news. So, our economy is doing very well and China’s is still sputtering. And having said all of that, that’s why I think a trade deal will happen, at least in the next few months.

And again, we’ve got this timing issue, right? We’ve got about a year, a little less than a year before the election. I don’t think Trump wanted to do that deal too quickly. And he would prefer that the Fed continue to lower interest rates at the same time. And really Trey, that’s what’s going on here is that you mentioned all these good things about the economy. Don’t forget the biggest thing is at the same time a year ago, the Fed was raising interest rates and said, “We are going to raise interest rates three more times in 2019.” They didn’t do that. They lowered interest rates three times in 2019. That’s been the biggest difference between last year’s sell off in December and this year’s rally to new highs, has been this change in direction by the Federal Reserve.

We’re talking a difference of six interest rate moves. That’s the equivalent of somebody coming down shooting a three pointer, running down the court, missing it, coming down the court, and the other team shoots a three pointer, makes it, and they say, “That was a six point turnaround.” This was a six interest rate move turnaround. It went from hiking three times to cutting three times.

Trey Ware:                         Well, and as you look at this right here, part of the reason they were doing that is they were concerned about inflation, but the inflationary numbers are at about 1.3%, so they’re still extremely low right now. As long as they stay out of that beautiful number of 2%, then there’s no reason for them to raise interest rates. So we really are getting more people back into the economy and back into the workforce. We’ve got more money circulating in the economy and the workforce. We have a lot of really, really positive things that are going on. And I think Bartiromo was right on Friday when she said the Democrats are taking a wrecking ball to our economy. Bottom line is we’ve finally got somebody in office who is putting our interests ahead of China’s interests, ahead of the UK’s interests or the European Union’s interests, ahead of France’s interests.

We finally have somebody in office who is pushing a policy forward that’s best for the United States, and that’s the real difference maker there. We can talk individual programs and policies as far as tax cuts are concerned and things like that and all that’s been good, but the bottom line is he has an interest in seeing America succeed, and he’s putting policies in place that will help America succeed. And the Democrats are trying to remove him from office and remove him … They’re making up stuff trying to take him out of the picture, which would set us right back into where we were. Thanks, Karl. Appreciate it. Karl Eggerss, creatingricherlives.com.