Seth R Freeman sees Fed rate cut only if labour market softens further
Seth R Freeman
, GlassRatner Advisory.
Give us a sense of all the action that we have seen from the global markets last week given the kind of tariff announcements we have seen, US is continuing to hold on to the green, but what could be the ripple effect on the rest of the world?
Seth R Freeman:
Well, the rest of the world is also seeing inflation, although interest rates, of course, in the EU are much lower than the United States, we are still in unknown territory in terms of where the tariffs are going to end up and we would not know really until the next couple weeks on August 1st. Although today the government was saying that August 1st is not a firm date and, of course, countries can continue to negotiate after that.
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And what do you think the impact is going to be on the market? So far we have seen the markets have remained largely, we have not seen any swings as and when the tariff announcements have kept coming except for the April lows that we touched, later on all the other deadlines that we saw there have not been like huge swings. So, what is the expectation going forward for August one and in the weeks before that?
Seth R Freeman:
Well, there seems to be optimism about earnings in spite of concern about tariffs and that is obviously what the market is thinking about. It is not clear that the Fed in September is going to lower rates. Maybe if the labour market continues to soften slightly, the Fed might lower rates and that expectation will help boost the markets. We are also in the summertime and volumes are lower, so a shift in the market on a lower volume can have a greater impact on pricing. But we are seeing a lot of layoffs on major companies. For example, Daimler announced it is laying off 2,000 or putting on furlough 2,000 employees out of its 29,000 employees in the Daimler Truck division and that is significant and we are going to continue to see companies retracting where they can.
Also, give us your sense on gold. What are you spotting on this front? And more than gold as well, the
dollar index
because the dollar index has been largely under pressure. Slight recovery if you could call it that over the last couple of weeks is what we have seen for dollar index. But other than that, it has been taking a beating so far. Any improvement if you are spotting on that front and your thoughts on gold?
Seth R Freeman:
Well, investors will go into gold when the dollar is weak and there is this kind of risk environment. What is more incredible, frankly, is the increase of interest in Bitcoin. So, we are definitely in a whole new world here.
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