by Federal Reserve Cuts Interest Rates for the Second Time in 2019
Over a decade had passed since the Federal Reserve had cut interest rates until July of 2019, and then again last week. These cuts have been reduced to the range of 1.75%-2.00%, according to a recent article posted this week. This is a big deal for numerous reasons: 1. This may show signs of a recession, 2. The cuts represent a safety in a slowing economy, and 3. Investors will lose confidence in the U.S. Economy. Let’s dive a little deeper:
Since the Great Recession, also known as the 2008 Credit Crisis, the United States Economy has been maintaining steady long-term growth through increasing Gross Domestic Products (GDP), maintaining a record-low unemployment rate, and keeping inflation at a steady 2%-3% increase. Since July, the Fed has seen signs that it may be necessary to reduce the interest rates in order to keep the economy from falling into a recession. Read Macro’s article from a couple of weeks ago to learn more about the risks of a slowing economy.
LAM Macro Analysts have noted a number of important points in the valuable recession signs, as well as how the current state of the economy can be compared to historical trends similar to the one we are currently in today. According to a CNBC article, risks of a global recession have been at an all time high since late 2009. As we can see in Europe, the markets have already begun to collapse. To add on to investor uncertainty, a series of surveys that were conducted by the Bank of America Merrill Lynch Fund Manager specify that 38% of investors expect a recession in the next 12 months. Uncertainty tends to be the number one cause of the collapse of United States infrastructures, which would eventually lead to the possibility of a global recession.
The four sectors of LAM is still looking for interested club members to apply for the Junior Analyst position! This will give you many opportunities to help the club conduct research for investments in the portfolio. All levels of experience are welcome, so please do not be afraid to apply. You will go through an interview process with your perspective Director, which may take up to a week to process. If you have any questions, please do not hesitate to reach out to any of the club’s Board Members!