Wait so rate cuts aren’t good for stocks...

Wait so rate cuts aren’t good for stocks

https://x.com/leadlagreport/status/1811795828194918579

..so here how it goes

..when market participants now see inflation slowing (disinflation gathers pace), they become upbeat because that signals an imminent Fed rate cut (the long awaited Fed pivot).

..two things can only happen.
1. The Fed stays pat and does not cut rates by Sept - and the overdue market correction swings into motion

2. The Fed cuts rates and is doing so because of an uptick in unemployment and declining business activity, but these data lag so they could be cutting too little too late, which explained why rate cuts tend to coincide with an economy that is already in decline.
A sick person already feeling sick is actually sick well before being diagnosed as having the illness, so similarly the US economy is showing all the signs of being sick except that it would take a quarter or more before being classified as being in recession. Even then, economic statistics are prone to being 'manipulated/engineered' e.g the part time employment rise is cushioning the full time employment drop, so the 'quality' of a 4.1% unemployment is not the same as what has been known conventionally.

So if the Fed does not cut rates, that would be bad for markets. But of the Fed does cut rates because a recession is in sight, then that would be worse for markets.

Know Where We're AT.