For Fed, Sell-Off Could Point to Fading Trump Stimulus

[DonViejo]

Oct. 23, 2018, at 5:31 p.m.

BY JONATHAN SPICER AND Howard Schneider

NEW YORK/BATON ROUGE, La. (Reuters) - A three-week stock market sell-off may signal concerns that the massive stimulus from U.S. tax cuts and government spending will fade sooner than expected, a central issue for the Federal Reserve as it considers when to halt interest rate hikes.

For now, a more than 7 percent fall this month in the S&P 500 index, which on Tuesday tumbled to July levels, is unlikely to derail plans for more U.S. monetary tightening in December, according to Fed policymakers.

Yet the sell-off, propelled by worries over rising tariffs and earnings of U.S. companies doing business in China, could begin to convince the Fed to scale back plans to continue rate rises next year and even in 2020.

More selling in the weeks and months ahead could begin to split what is currently a remarkably unified central bank between policymakers more and less willing to heed a warning from investors: that the hot U.S. economy cannot withstand the combination of trade-related knocks to global growth, rising prices and higher borrowing costs.

"It's pretty clear that the market is saying that it feels the Federal Reserve is being too hawkish," said Oliver Pursche, chief market strategist at Bruderman Asset Management.

David Gilmore, partner at FX Analytics in Essex, said: "Markets are starting to wonder if the good times generated from Trump's tax cuts and deregulation are in the rearview mirror."

more
https://money.usnews.com/investing/news/articles/2018-10-23/for-fed-sell-off-could-point-to-fading-trump-stimulus

[Xipe Totec]

1. The Trump Stimulus is like Viagra: It stiffs you, lasts 4 hours, and makes you see Blue. nt

[Wellstone ruled]

2. Again a shot at the Fed Chairman.

The previous Chair Lady forecast this would most likely occur with the Trump Tax give away. Remember,the Fed is sitting on Trillions of Junk from the last Republican Recession.

[spooky3]

3. Have you checked your 401k lately? This has been a terrible year, thanks in part to Trump.

Most target funds (e.g., Retirement 2030) are invested primarily in global stocks, domestic stocks, and bonds. Typically they return ~ 6 % per year if you are fairly close to retirement; more if you are farther away.

Trump's erratic behavior (e.g., tariffs, saying nutty things) has contributed to poor performance in global markets all year.
Domestic stocks (e.g., S&P 500) have given back nearly all of the gains they amassed earlier this year.
Bonds' prices go down as interest rates increase.

So everything is going down, down, down.