KW: Jim Rickards writes, The FED didn’t plan to cut rates this year. But its intentions are now in shambles. Another rate cut is coming in the weeks ahead. The stock market is still not fully priced for coronavirus. Investors should expect more drawdowns, although we are getting closer to an interim bottom. We’re all aware of the global slowdown, but no one has seen much hard data yet; it’s mostly anecdotal. That data will arrive over the next few weeks. It will be ugly. A Fed rate cut in March or April might stop the bleeding and put a floor under stocks. Yet, coronavirus has a long way to run and it will be a long time before stocks get back to anywhere near their recent all-time highs. Meanwhile, the Fed is back to easing policy whether they like it or not.
In a statement on Tuesday, the central bank said it was cutting rates by half a percentage point to a range of 1-1.25 percent. It said the “fundamentals of the US economy remain strong” but noted that the coronavirus “poses evolving risks to economic activity.” It added that developments were being closely monitored and that the Fed would “act as appropriate to support the economy.” The markets didn’t buy it for long and the DJA plunged another 785 points while gold caught an updraft rising to US$1650 before falling back to $1640.