What’s Behind The Fed’s Big Rate Cut Charade?The Fed claims control, but are their moves masking a bigger problem?
It feels like the Fed just came back from some secret society meeting. You know, the kind where they wear masks and chant in unison. Because the Fed’s mantra right now? “Expand, expand, inflation be dammed!” This past Wednesday, they made a historic 50-basis point rate cut to kick off the easing cycle, and already, they're hinting at even bigger cuts. It’s like they think they can chant their way out of inflation, pushing rates lower while pretending everything’s fine. But here’s where it gets crazy. The market is already starting to price this in. The 13-week Treasury yield is plummeting.
And the CME FedWatch tool is now showing a 53% chance of a 50-point cut at the November meeting.
Just last week, it was sitting at 29%. See how fast things change? Yet, Fed Chair Jerome Powell says 50-point cuts won’t be the norm. The market doesn’t believe him—and neither should you. Remember, back in July, Powell admitted they’d be cutting rates for reasons other than inflation. With “supercore” inflation still at 4.9%, it’s clear inflation isn’t the real priority here. So what’s really going on? Well, part of it’s political. If Harris wins the upcoming election, Powell’s likely to keep his job. But if Trump wins? Powell’s out—Trump’s already said he’s going to fire him. So the Fed is cozying up to the current administration, dropping rates to stay in their good graces. Meanwhile, banks are struggling with huge losses—just look at Ally Financial, whose stock tanked after they revealed people can’t pay their car loans. The Fed also has its own skin in the game. They’re holding onto massive losses—up to $10 billion a month—on their treasury holdings. Cutting rates helps cushion those losses. It’s all a charade—Wall Street, the Fed, and the government are playing their parts, pretending everything’s under control. But we both know that’s not the case. Now, I get it—it’s tough to feel excited about anything in this market. But there are a few plays still worth your time. Last week, I shared my #1 defense stock pick, and it’s already hit a 52-week high. The trade I called out? It’s up 20% already. You can check it out here: Exploding Beepers Signal My #1 Defense Stock Play. At the end of the day, the Fed will keep pretending they’ve got inflation under control. But with major economic data coming this week—and an election just 43 days away—things are only going to get more unpredictable from here. Keep your head on a swivel and don’t get caught up in the noise. Trade smart, Josh Belanger You’re currently a free subscriber. Upgrade for the full experience and receive exclusive special reports like "How to Get Rich in The Stock Market" and "Congress' Secret Stock Playbook: The Top 5 Power Picks Revealed”.
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Senin, 23 September 2024
What’s Behind The Fed’s Big Rate Cut Charade?
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