Loading ...“There is a problem with cutting rates because it shows a sense of alarm,” Nobel-winning economist Robert Shiller said Tuesday on CNBC’s “Squawk Box.”
A quarter-point drop in interest rates is a tiny adjustment, but the fact that the Fed is cutting rates at all had the opposite intended effect, sparking fears of recession.
Kyle Bass, founder and chief investment officer at Hayman Capital Management, told CNBC’s David Faber that the Fed will follow the rest of the world’s central banks to zero.
“You don’t want to use the Z word because it scares people,” Shiller said. Many Fed watchers have not only used the Z-word but predict the Fed will lower rates even further than that in the event of a recession.
The market is already giving you a glimpse into this future, with $15 trillion in negative-yielding debt around the world. The U.S. is an outlier with positive rates.
All these ideas leave the market jittery. Stocks ended down for the first time in four trading days, a sign the market could continue down the same path of volatility investors have seen since the last rate cut. Not everyone expects the worst. J.P. Morgan’s global head of macro quantitative and derivatives strategy, Marko Kolanovic, says most of the recent moves in stocks and bond yields have been driven by technical flows, algorithmic selling and poor liquidity, not fundamentals.
He’s predicting an enduring comeback. [GEE! WHAT A SURPRISE from a J.P. Morgan guy–but bring it on–gold went up with stocks also, remember?]
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Kyle Bass= told CNBC’s David Faber that the Fed will follow the rest of the world’s central banks to zero.
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