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Tech outperforms after jumbo Fed rate cut: Are bullish signals coming?
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Moomoo CA joined discussion · Sep 23 05:51

Weekly Syrup: 50 basis point rate cut=more than 50% chance to earn?

Weekly Syrup: 50 basis point rate cut=more than 50% chance to earn?
Hey mooers!
In the investment world, Federal Reserve decisions guide capital flow like a lighthouse. At the September FOMC meeting, the Fed announced a notable 50 basis point rate cut, concluding the rate-hiking cycle that started in March 2022.
This decision met the expectations set by CME interest rate futures. Despite the cut, Chair Powell adopted a cautious tone about future reductions, clarifying that this adjustment was tailored to the current job market and should not set expectations for future cuts. This approach aims to temper market optimism to avoid reigniting inflation. Read more>>
Then where are the potential opportunities? What should be my strategy?
A 50 basis point rate cut will likely result in:
– A drop in Treasury yields: A significant rate cut could further reduce yields in the short term as the market responds positively to the Fed's preemptive actions.
– An ongoing increase in Treasury prices: Even with a substantial cut, which the market anticipates, Treasury prices are expected to keep rising, albeit modestly.
Weekly Syrup: 50 basis point rate cut=more than 50% chance to earn?
Should the Federal Reserve opt for a gradual rate cut, we might see a slight uptick in Treasury yields and a minor decline in bond prices. However, a more substantial cut would lower yields and sustain the rise in Treasury prices, providing a strategic opportunity for market positioning.
Weekly Syrup: 50 basis point rate cut=more than 50% chance to earn?
But before other recaps, let's look at something different:
What's Moo'ed?
"What's Moo'ed" is a space that captures fun, newsworthy, jaw-dropping and sometimes confusing (lmao) news clips for mooers so that you know this is a colorful world (or a weird and speechless one).
1. The real "dirty" talk
People who enjoy eating dirt, known as 'Crunchers,' are not keeping this habit a secret. Instead, these unabashed dirt enthusiasts are openly sharing the supposed health and beauty advantages of eating soil across the internet. One health advantage is obvious: they make the rest of us look smarter.
Weekly Syrup: 50 basis point rate cut=more than 50% chance to earn?
2. Don't be so talkative!
Voiceitt, an Israeli company, is developing AI-powered speech recognition technology that helps people with speech impairments from conditions like cerebral palsy and Parkinson's communicate more effectively with others and digital devices, addressing the frequent misunderstandings they face with standard smart speakers and AI assistants.
A nice move indeed: now speechless people can really speech less.
Weekly Syrup: 50 basis point rate cut=more than 50% chance to earn?
3. Coffee costs too much fee!
According to Gavin Fridell, a professor at St. Mary’s University, coffee bean prices have reached their highest level in over a decade and are likely to climb further due to severe droughts affecting two of the world's largest coffee producers.
Well, the best solution is to delay work starting time so that we don't need coffee in the morning. Or, just replace coffee with one glance at your account balance. You won't feel sleepy immediately. Trust me.
Weekly Syrup: 50 basis point rate cut=more than 50% chance to earn?
Okay, let's dive back to the syrup:
Plan Your TFSA: CIBC Recommends Now Is the Time for Canadian Dividends
In an August research note, CIBC analyst Ian de Verteuil highlighted a potential shift in Canadian investment trends due to decreasing interest rates. He projected that continued rate drops could lead Canadian investors to move around $220 billion (US$161 billion) from fixed-income products into dividend-paying stocks.
This shift follows a trend where rising rates previously pushed over $200 billion into short-term fixed-income products. De Verteuil noted the challenge Canadian investors face in finding high yields, citing the lack of a municipal bond market and a very limited high-yield bond market in Canada. Read more>>
Weekly Syrup: 50 basis point rate cut=more than 50% chance to earn?
Let's see what other mooers are talking about in the past week!
Interest rates influence stock market valuations. Warren Buffett compares them to gravity: “Interest rates are to the value of assets what gravity is to matter.”
So lower interest rates = higher stock prices?
It depends… on the strength of America’s economy.
When the Fed cuts rates because we’re headed into a recession, things get messy. It’s happened a dozen times since 1970, and stock market performance in the next year has historically been all over the map.
Outcomes range from down 36% to up 34% for the S&P 500. Messy!
Stocks perform much better after rate cuts when the economy keeps humming.
My take: Don’t try to make money trading stocks based on big “macro” events. Instead, invest in great businesses that’ll thrive regardless of what the Fed does.
Weekly Syrup: 50 basis point rate cut=more than 50% chance to earn?
here's my entry, basically mostly stocks and REITs to take advantage of the interest rate cut theme or those I felt is under appreciated counters so I hoard them and wait for them to get appreciated so I can sell for a better price. I tried to get those counters that at least have a good business performance and pay some dividends every year so that if I got it wrong at least I have a passive income position to compensate me for my mistakes. besides having passive income is never a bad thing except that active income usually beat passive income. but at least we all want to have some passive income I guess and why not turn our mistakes into a passive income stream?
Surprising Fact
The top-performing stock on the S&P was not a big tech stock or a stock particularly highly correlated to the rate environment. Rather it was Darden Restaurants, the parent company of several restaurant chains including Olive Garden and LongHorn Steakhouse, as its shares spiked 8.3%. The gain was most likely not due to Wall Street’s hopes of rate cuts igniting a major appetite for breadsticks, but rather a reaction to Darden’s partnership with Uber Eats announced Thursday morning.
What do you think of rate cut, high dividend investing and other stuff? And what's your take on other hot issues in the past week? How can they earn you more money(we pray that for you)?
Share your stories, ideas, feelings and emojis in the comments below:
Participation Reward: Join the discussion (10 words or more) with reasonable comments, and you will receive 33 points.
Event time: From now until September 29, 2024, at 24:00 ET time.
Weekly Syrup: 50 basis point rate cut=more than 50% chance to earn?
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only. Read more
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Moomoo CA
Moomoo Technology Inc. Official Account
How's it going, eh?
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