Latest / Best of Business / Sam Dickie: Fisher Funds expert on the US Federal Reserve moving to cut interest rates

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Sam Dickie: Fisher Funds expert on the US Federal Reserve moving to cut interest rates · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks'd be follow
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  Speaker 2: This morning, the FED delivered what markets had been expecting
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  Speaker 2: for weeks. It was a twenty five basis point rate cut.
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  Speaker 2: But the thing is that the US medium term interest
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  Speaker 2: rates actually higher following the cuts. So let's have a
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  Speaker 2: look at what's going on here. Sam Dickey from Fisher Funds.
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  Speaker 3: Is with us Ay Sam, good evening here.
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  Speaker 2: Why did the interest rates rise and how did the
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  Speaker 2: other asset classes react.
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  Speaker 3: It does seem like a bit of a paradox. You
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  Speaker 3: cut your benchmark rate and market interest rates go up.
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  Speaker 3: But like you said, this had been fully expected by
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  Speaker 3: the market ever since the US job market started to
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  Speaker 3: soften in earlier was so. In fact, at this time yesterday,
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  Speaker 3: the market was pricing a one hundred and five percent
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  Speaker 3: chance of a rate cut today, which is a silly number.
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  Speaker 3: What that really means is the market was pricing a
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  Speaker 3: small chance of two rate cuts today. So the market
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  Speaker 3: was a little disappointed. The old buy the rumor, sell
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  Speaker 3: the fact. But on top of that, powder and commit
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  Speaker 3: to a aggressive easing. He said he would do a
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  Speaker 3: kind of meeting by meeting approach, and in fact the
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  Speaker 3: FED raised their full year growth forecast from one point
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  Speaker 3: six to one point eight percent. So many in the
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  Speaker 3: market were hoping, you just commit to a fairly aggressive
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  Speaker 3: easing policy on the back of extremely weak jobs numbers,
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  Speaker 3: But he didn't do that. Other asset classes were pretty muted.
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  Speaker 3: US equities march higher, of course, up a touch, but
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  Speaker 3: the big move was the dollar. So because interest rates
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  Speaker 3: are higher, that means investing the US dollar and putting
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  Speaker 3: money in the bank there is relatively more attractive. So
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  Speaker 3: the US dollar went up, and things like the KI
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  Speaker 3: dollar and Aussie dollar fell very sharply on the back
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  Speaker 3: of it.
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  Speaker 2: Now, what do you think is the real story behind
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  Speaker 2: the Fed's nine month paused before this?
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  Speaker 3: Yes, a lot of intrigue around this. So you have
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  Speaker 3: to take your hat off to Powe and co. For
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  Speaker 3: standing fast for nine months in the face of President Trump.
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  Speaker 3: So President Trump has called him in recent months he
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  Speaker 3: complete failure and a real dummy because he should have
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  Speaker 3: cut rates sometime ago according to the administration. Of course,
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  Speaker 3: presidents want to pressure the Feed to his rates rapidly
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  Speaker 3: because it stokes the economy and makes the administration look
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  Speaker 3: good ahead of midterm elections next year. But the Feed,
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  Speaker 3: on the other hand, has been concerned about the inflationary
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  Speaker 3: impact of tariffs, especially now tariffs have saddled, settled, and
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  Speaker 3: the rubber's going to meet the road there.
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  Speaker 2: What do you think this all means for investor, Sam?
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  Speaker 3: I don't think Powers playing politics. I think he is
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  Speaker 3: doing what he's supposed to do, which is as maintainer
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  Speaker 3: as independence, which I take my hat off to him.
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  Speaker 3: Remember inflation that the rubber does meet the road on
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  Speaker 3: inflation from here. So Home Depot, who we spoke to recently,
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  Speaker 3: who have held pricing firm despite the fact they import
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  Speaker 3: a lot of goods from around the world the subject
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  Speaker 3: to tariffs. They had a lot of low price inventory
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  Speaker 3: that they imported before the tariffs hit, but they basically
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  Speaker 3: run out of that low priced inventory and they are
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  Speaker 3: strongly signaling that they will lift prices from here. So
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  Speaker 3: if we do start to see a rise in inflation,
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  Speaker 3: that might sort of tie the Fed's hands a wee bit,
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  Speaker 3: But if not, there's plenty more room to ease.
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  Speaker 2: Okay, Sam, Look, it's good to talk to you.
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  Speaker 1: As always.
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  Speaker 2: To talk to you again very soon. Sam Dickey official funds.
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