Don't Be Fooled by These "Snap-Back" Rallies – Look for This Instead

Central banks to the rescue? Good luck with that. The U.S. Federal Reserve tried to swoop in and save the market panic with a 50-basis-point cut on Tuesday. But lowering rates, even a "concerted" lowering of rates by several central banks working together, in the face of already low rates, isn't going to be economically stimulative. Central banks lowering rates now is like opening the barn door after the horses have already bolted. Lower rates aren't going to get consumers out if they're scared to go out - or if they can't go out. They aren't going to induce capital spending by companies if companies don't know where demand will come from or when it will come back. Besides, the flight-to-quality trading that's driven hundreds of billions of dollars into U.S. Treasuries, for example, has already lowered rates dramatically. When the coast is clear and the coronavirus is behind us, central banks will have to start pulling back the stimulus they intend to flood economies with. Markets know that's the other side of lowering rates in an eventually passing crisis. So no, lowering rates isn't going to put a hard and fast support under weak markets. Markets are looking at economies and sales and revenue and earnings and profits... and now losses. Those economic realities are reflected in stock prices. We're not out of the woods yet. But this will tell us when we are... Full Story We're not out of the woods yet. But this will tell us when we are... Full Story Tags: trading strategies To get full access to all Money Morning content, click here About Money Morning: Money Morning gives you access to a team of ten market experts with more than 250 years of combined investing experience – for free . Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors. Disclaimer: © 2020 Money Morning and Money Map Press. All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning. 16 W. Madison St. Baltimore, MD, 21201. The post Don't Be Fooled by These "Snap-Back" Rallies – Look for This Instead appeared first on Money Morning - We Make Investing Profitable .