There’s no way we’ll never have another recession. Recessions are a natural part of economic cycles.
There’s a zero percent chance the fed won’t cut rates in a recession. We may even see the fed set a negative rate. Some countries in Europe did it.
If you honestly think there will never be another recession, then you should get massively long stocks with as much leverage as possible.
Recession I mean 50% drop, Correction I mean 20% drop. Depending on how FED controls economy we may have many corrections and rates can fluctuate.
The point is FED is trying to avoid rate near zero and trying to uplift higher. They have a choice to spread the rate hikes 6 months once or 1 year once so that economy recovers.
FED main aim is not recession, but raising rates to grow economy healthy.
The ultimate question is “What if FED does not reduce rates and market hold the rates even after correction?”
The assumption that rates may go down in future is not guaranteed. what if The mortgage rate may stay flat at 5% level? We must be prepared for that scenario.
Should use standard definition.
Correction = 10% decline from ATH.
Bear market = 20% decline from ATH.
50% decline is not common with index, mostly individual stocks/ houses in third tiered neighborhoods.
Ok, I do not think FED will act on 10% or 20%, but will act at 50% impact. IMO, FED is planning not to hit 50%, but keep the economic cycle within 10% or 20% level.
If they are successful, then there is no need to reduce rate and market rate will continue to hold flat higher level.
A recession is defined as 2 or more consecutive quarters of negative GDP growth. It is independent of RE and stock prices. If GDP keeps growing, then stocks and RE will grind higher even if there are corrections along the way. I don’t see how a 50% fall is possible if GDP keeps growing. If GDP growth turns negative, then the fed will cut rates.