Tuesday Target | 38/52
Tuesday Target | 38/52
Rate Cuts… Yawn… Feed Me Paper
How Emotional is the Fed?
As we approach what some call the most important Fed meeting ever, there's a 65% market expectation for a 50 basis points cut. But is this the magic bullet for inflation? Not quite. With core inflation still far from the 2% target and economic data offering conflicting signals, a 50bps cut might send a shaky message. While markets might cheer initially, the long-term risk lies in acting too quickly on incomplete data. If Powell goes big and misses the mark, the credibility of the Fed’s so-called data-driven approach could look as flimsy as a paper hike.
Spinning for Basis Points
When did the Fed become a risk-taker? It feels like we are no longer on rational grounds; instead, we are betting big on uncertain outcomes. Once reserved for economic crises, a 50bps rate cut is now seen as a political move ahead of elections. A cut that deep could scream: Yes, the economy is fragile, but shhhh.... let's keep it quiet! And while some Fed whisperers are clamoring for higher numbers, the optics couldn't be worse. If Democrats push for 75 basis points and the Fed caves, even the most impartial observer might be tempted to chew that paper.
The Investors’ Waiting Game
The smart money is already positioned for a downturn, with hedge funds piling on shorts while the stock market rides high on rate-cut hope. The S&P may be flirting with all-time highs, but hedge funds are betting against the rally with a vengeance. If the Fed underdelivers with only 25bps, expect a violent correction as markets adjust to the reality that more aggressive cuts aren’t coming. Meanwhile, bonds are stuck in recession prediction mode, sending false positives like they’re on autopilot. In short? This week's Fed move will decide whether the rally continues or not.
Become Rich Overnight with Options? Yeah Right…
TUESDAY TARGET: We bullishly entered Intuitive Machines last week. Why? Because we think Intuitive Machines sounds cool. Check the Subscriber Chat for a more professional answer.
Please note, all content is for educational purposes and isn't personalized for individual portfolios or financial advice. Curious about putting any of these ideas into action? Juri von Randow is here to offer guidance or connect you with the right resources.