Kevin O’Leary: “I’m an ambassador for the American Dream”
To a packed Weis Center this past Tuesday, Kevin O’Leary, known for his role as an investor and TV personality on ABC’s long-running show “Shark…
Thought Leader: Kevin O’Leary
Fed sparking irrational market optimism over potential rate cuts, former FDIC Chair Sheila Bair warns
Market optimism over the potential for interest rate cuts next year is dangerously overdone, according to former FDIC Chair Sheila Bair.
Bair, who ran the FDIC during the 2008 financial crisis, suggests Federal Reserve Chair Jerome Powell was irresponsibly dovish at last week’s policy meeting by creating “irrational exuberance” among investors.
“The focus still needs to be on inflation,” Bair told CNBC’s “Fast Money” on Thursday. “There’s a long way to go on this fight. I do worry they’re [the Fed] blinking a bit and now trying to pivot and worry about recession, when I don’t see any of that risk in the data so far.”
After holding rates steady Wednesday for the third time in a row, the Fed set an expectation for at least three rate cuts next year totaling 75 basis points. And the markets ran with it.
The Dow hit all-time highs in the final three days of last week. The blue-chip index is on its longest weekly win streak since 2019 while the S&P 500 is on its longest weekly win streak since 2017. It’s now 115% above its Covid-19 pandemic low.
Bair believes the market’s bullish reaction to the Fed is on borrowed time.
“This is a mistake. I think they need to keep their eye on the inflation ball and tame the market, not reinforce it with this … dovish dot plot,” Bair said. “My concern is the prospect of the significant lowering of rates in 2024.”
Bair still sees prices for services and rental housing as serious sticky spots. Plus, she worries that deficit spending, trade restrictions and an aging population will also create meaningful inflation pressures.
″[Rates] should stay put. We’ve got good trend lines. We need to be patient and watch and see how this plays out,” Bair said.
Relevant and recent posts
Sara Fischer: Lara Trump to interview female WH officials for first Fox show
Lara Trump‘s first show as a Fox News host will highlight the key women who helped get her father-in-law President Trump elected and who now…
Thought Leader: Sara Fischer
Scott Morrison among many to express support for Jewish community
Former prime ministers Tony Abbott and Scott Morrison, among others, have expressed their support for the Jewish community amid troubling times in Australia. This came…
Thought Leader: Scott Morrison
