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We Plead with You, Jerome, Cut CUT CUT!

by | FMT News

Building Consensus

What Jerome Powell really likes to do is gather support for his views.

I like that… It makes my investing much simpler because Powell makes his work predictable.

His loop goes like this:

  1. Understand the market’s current consensus.
  2. Understand the market’s current projection for the future.
  3. Substantiate an inner consensus within the FED committee.
  4. Be a little behind the curve and let the market self-adjust rather than jump the gun and let markets panic over a hasty Federal Reserve.

So, what’s my point?

The market’s current volatility is normal… We are at stage 4.

What is stage 5?

  1. Don’t leave the markets hanging for too long – give them what they want not in one fell swoop but over the course of a few meetings.

In other words, Powell isn’t about to give speculators their dreams in a box wrapped with a bow.

Powell despises the greedy bankers and traders on Wall Street.

He knows the markets are begging for lower rates, but he hates that they make leveraged bets on his future decisions, so he’ll be patient with them, which is exactly what annoys them.

In general, though, the Federal Reserve will probably cut by about 1.5% in the next 18 months.

All we’re really doing is normalizing interest rates to historic norms – not cutting into dovish territory.

The FED is not about to stimulate the economy at all.

Washington’s Inflation Reduction Act and additional programs that will be announced after the new president is elected will provide the private sector with sufficient funding to generate incredible growth, but the normal interest rate environment will help many more small and mid-sized businesses that are currently struggling.

I view the current period as a calming process for markets that have been pricing in a lot of earnings power that’s probably premature.

I estimate the FED will lower the Fed Funds Rate to 4.00% by the end of 2025 while current estimates are that the September 2025 rate will be 3.25%!

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    In other words, the markets are pricing in a heck of a lot of cuts, and I just don’t see it, but I’m happy to be wrong.

    A lot can happen between now and September 2025 including a new figure in the White House…

    One important thing to keep in mind is that the world’s largest companies are cash-rich and will continue buying back stock hand over fist.

    This alone tells you that a recession is not underway…

    The United States has simply added so many jobs that it had to slow down at some point. The FED will now cut rates, and the growth will broaden and return.

    Best Regards,
    FutureMoneyTrends.com

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