A Federal Reserve Interest Rate Cut and a Volatile Market – Interview with Jon Najarian

Last Tuesday (3/3), Jon Najarian sat down with Ji Suk Yi of WGN to discuss the Federal Reserve’s decision to cut interest rates by .5 percentage points. The interview can be read in its entirety below.

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Jon’s Interview with Ji Suk Yi of WGN

Ji Suk Yi: Let’s get started and down to business right away with CNBC analyst and co-founder of Najarian Family Office and Market Rebellion, Jon Najarian. Hi Jon!

Jon Najarian: Hello Ji, how are you today?

Ji Suk Yi: Oh, fantastic. Well, I mean I guess it’s all over the place, I can’t make heads or tails of what’s going on, so can you explain it to me?

Jon Najarian: Well, I can try, and we were talking about this on Friday. We were saying, you know what, a coordinated effort by central banks with a statement, just a statement, that would say, you know, “we’re willing to put the full faith in credit or blah blah blah,” all those kind of keywords…Wall Street and I think markets around the world would have been just fine with that. Unfortunately, central banks did make a statement today, and it wasn’t what the market wanted…and what investors wanted to hear, which I think I was a lot closer to what they wanted to hear. So instead, with the markets selling off, the fed stepped in today and said we’re going to cut, you know, 50 basis points off the fed funds rate and they’re saying they’re doing it cause it’s an emergency. So, people react as they frequently do. I mean you know if you were on an airplane and they said, “we’re going to make an emergency landing.” Would you feel better about how you were flying or kind of nervous?

Ji Suk Yi: Good point, I never thought about it that way! Do you think the feds felt pressured? Why did they decide to do this?

Jon Najarian: I think they had hoped and of course I’m not privy to what went on, but I think they’d hoped that along with the G7, which was those central bankers that I was talking about that had the opportunity to make a coordinated statement, but like I say, the statement that they made was not what the market really wanted to hear. The fed must have said, “well we’re going to have to act alone then and we better hit it with not a 25 basis point cut, a quarter of one percent, but instead half a percent to show them how serious we are.” This is the biggest move that J. Powell has made in terms of basis points to either increase or decrease the interest rate and people took it, I think, as a sign that well, even though there’s not as many folks dying of this when the numerator or denominator for these things…that is what you want to see, you want to see the percentage of mortality dropping as more and more people come down with the virus. But by saying that it’s an emergency, I think that made the markets a little nervous and that’s why we got what we got right now.

Ji Suk Yi: Well they should have talked to you, Jon, first. So, what happens now? So, they did this and it’s not helped in the way that they wanted necessarily so what’s next?

Jon Najarian: Well, I think the markets will digest exactly what a half point interest rate cut means because what it does mean to an awful lot of people is that they’re constantly comparing fixed income to the stock market and bonds, in other words, to the stock market. You just shaved interest rates and basically cut them in half in the United States and that will be priced into stocks and ultimately stocks will rally on this I believe. But, like I say, the way it was delivered, just like if a dentist, all of a sudden, showed up with a really big syringe next to your mouth you’re not going to feel too comfortable about it for the next few minutes. Now, a couple days later, if the pain’s gone in your mouth, you’re going to feel a lot better. You’re not going to feel good in the short term though so I’d say this is short term pain but long term, it will have the effect that J. Powell and the fed hoped it would have.

Ji Suk Yi: Hearing a lot about these stay at home stocks as folks bunker down and binge on Netflix and order food at home and don’t go out. Are there some buying opportunities there?

Jon Najarian: I’m sure. But, on the other hand, some others, like Uber kind of plays both sides of that. Because Uber is, of course, a company that many of us use a lot to take us to and from but maybe we won’t be doing as much of that under the scenario you just laid out Ji. But, under the UberEats and all the DoorDash type folks, those are things that people, Grubhub and so forth, people will likely use more of just as they stocked up on food at Costco this weekend. So, there are a lot of stay at home plays that still continue to work but I think yesterday was a sign that the market at least has little more balance, at least a little push against the pull and I think that’s a better sign but like I say, today I think it’s a little bit of “sell the news” event that people didn’t get what they’d hoped they’d get.

Ji Suk Yi: So that’s good to hear from you and that’s your assessment of. What would you like to leave the listeners with that are worried about their money and their portfolios right now?

Jon Najarian: I think we’re still a lot better than we were last week, so in other words, stability into the market and the fact that the fed really is paying attention. They’re not going to be late with a move this time. They may have been a little early in the verbiage about it being an emergency cut might have been a little bit too much, but I think things will calm down here and I think it’s going to be a lot better in the coming weeks.

 Ji Suk Yi: Well, thank you Jon for that positivity and that rationale really appreciate it. CNBC analyst and co-founder of the Najarian family office and Market Rebellion. We’ll talk to you next week.

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