Rumblings of a Fed pivot are gaining traction, with reactions ranging from excited to anxious.
In case you need a little economic refresher, a Fed pivot occurs when the Federal Reserve reverses its policy outlook, changing course from loose to tight, or from tight to loose, depending on the environment.
As James Lavish puts it, when the Fed tightens monetary policy, it’ll raise interest rates or sell assets off its balance sheet. When it stops raising rates, we reach a Fed pause status. When they begin to lower rates once again, it’s considered a pivot.
The Fed pivots when economic conditions have changed in such a way that continuing on its current path no longer makes sense. Anyone keeping the pulse on what’s going on will tell you things have been a bit upside down for a while now.
What would a Fed pivot mean for your business? Are red flags being ignored? Those are the questions on our minds.
Mixed Reviews
We certainly have our fair share of Fed pivot cheerleaders, but some analysts warn there are risks attached.
If the Fed surprises us all and doesn’t cut rates as much or as soon as we predict, we could have a major default cycle on our hands…and it would be unavoidable.
Creative financing strategies might not be enough to pull us out. The investors who buy into those strategies might not have the higher claim on a company’s assets in a bankruptcy situation after all.
According to researchers, creditors are on the alert. Some investors are starting to put protections in place within credit documentation so they don’t get short changed in a bad situation.
Keeping tabs on who’s adopting protective strategies might serve us better than buying into the sugar-coated “optimism” we see just about everywhere.
Misery Loves Company
According to the latest Misery Index results, Americans shouldn’t be wallowing in misery. However, real life experience once again tells us a different story.
Even though inflation is cooling and Americans are beginning to spend again, sentiment measures are still low. How come? Well for one, political polarization is at an all-time high and isn’t helping.
We’ve also just entered what’s shaping up to be another wild election year. Buckle up.
It’s also important to remember that the impacts of inflation leave wounds that take a long time to heal. According to the Labor Department, consumer prices were 19% higher in November than they were pre-pandemic.
Sure, an analyst could tell you things are getting better, but your average grocery shopper might not be as jazzed (yet).
When Change Makes a Call
As we put 2023 behind us and look ahead to all that 2024 has in store, it feels like we’re all starting a new leg of the journey.
Whether you’re answering a brand new call or gearing up for the next quest on an existing mission, the most important thing is to keep moving. When change barges in, you’ll eventually have to respond.
Instead of worrying about the changes on the horizon, think of them as opportunities you can’t miss.
If you’re ready to answer the calls 2024 has in store for us, just know you don’t have to answer them alone.
At Dare, we know how important it is to have a partner on the journey. Our Back Room Service is one of a kind.
When you work with Dare Capital, you’ll experience:
- Greater income (a lot more)
- Owning assets instead of commissions
- Zero investment down
- No personal liability
- Fifty-fifty split on risks and profits
To learn more about what it’s like to work with us, give us a call.
Until next time,