18 Sep 2024. Fed rate cut

DiMoney : Where did you see that master expects 50 bp?

Daring Lu OP : In the first paragraph of the article.

JaydenTan : huh? What I heard is if cut 25 basics pts , market will rise ? 50 will sink ?

JaydenTan DiMoney : It was said 50 pts cut in the beginning, but after cpi results out, many say 25 basics cut

Daring Lu OP : Markets Crave A 50 Basis Point Cut From The Federal Reserve

DiMoney Daring Lu OP : Thanks:  no way fed cuts 50.

Daring Lu OP JaydenTan : The expectation is 50 basis point cut.
If anything less, it will be disappointment.
Mkt will sink.
Conflicting issue here.
If Fed reduces 50 basis points, mkt may suspect negatively that Fed may know that the economy is in trouble, so cut 50. It happened a few times in history. After the drastic cut, the economy went into recession.

Rate cut will boost spending or borrowing...
The issue is that it may be too late as the response may be too late to rescue... The economy may be already in recession.

Hence, Powell may likely declare a series of cut or progressive gradual cuts. This will stabilise the market.
But we don't know what game they are playing. They decide how the USD and Equities movement by their words and actions. Wat is the best for them?
Eg. Years ago, they raised interest rate,  strengthened USD. US institutions and wealthy may have already started to place their investments in developing countries or Japan where those currencies were hit the most. Now, if the US is going to cut interest rates, foreign investment funds may return to the US since USD is weakening (currency gain) and to take profit from those countries' investment. This week, Singapore, Philippines, Indonesia, Thailand.. stock markets reached new peak.
The mangos are ripe, fund should start to exit and return to US by end 2024.

With a series of rate cut, soverign bond will benefit the most. Investors will buy their long-term soverign bond. The bond price will surge drastically to lure more to buy.
This will solve the issue of no buyers for their bond. Prefect scenario?

Another thought, if China economy collapses, who will benefit the most?
Will China be the next victim like Japan?

Daring Lu OP : Russia and Ukraine war may escalate into a world war 3.
NATO is getting more involves in helping Ukraine. Russia is angry about it.
Read today newspaper.
Any negative news can sink the mkt.
Equities have priced in all good news.
The time has more for bad news to be priced in.

Daring Lu OP : Calm before the storm.
It is brewing .... when the time comes it will be ferrous, like hungry beast release from captive.
Is decline not coming anymore? Americans are currently experiencing the wealthiest period in their history, thanks to real estate and stocks!

Warren Buffed : Likely 25, cpi jobless so good data