Oh baby, I like it when Powell talks dirty rate cuts, and apparently so does the market. After a steep market correction yesterday, U.S. stocks are popping on the back of the Fed’s foreplay rate cut talk in Jackson this morning. 

(Source: Giphy) 

In short, in a speech that had every investor on the edge of their seats like it was the season finale of Succession, our boy Powell casually stated, ““The time has come for policy to adjust.” Translation: It’s friggin go time.

(Source: USA Today) 

Now of course, Powell didn’t mention the size, but in this instance, size doesn’t really matter, because at this point, whether it’s a 25 slice or a 50 point bonus, we’ll take whatever the hell the Fed gives us. 

(Source: Giphy) 

But given Powell stated some cryptic hints in: “My confidence has grown that inflation is on a sustainable path back to 2%,” and the fact that economists are screaming that the Fed is behind schedule - I wouldn’t be surprised if we got a full 50 point basis cut. 

And clearly, the market is expecting it too as U.S. stocks have bounced back after yesterday’s sell-off due to the Labor Department's classic miscalculations. For those who missed the story on this, the 2.9 million jobs ‘created’ between April 2023 and March 2024 were actually only about 2.1 million (in monthly terms, it was actually closer to 174k vs the 242k the Department of Labor stated).

(Source: Inc.com) 

Which is actually hilarious considering these people are educated, and supposedly intelligent government individuals, yet they miscalculated the forecast by 30% - imagine conducting an epic f**k up like this, (the biggest revision since 2009), and still being employed. Crazy…

(Source: Giphy) 

But alas, despite the massive rounding error, Powell uplifted the markets as the Nasdaq is pumping +1.15%, while the S&P 500 and Dow follow suit by inching up +0.83% and +0.84% on the day. 

(Source: CNBC) 

Additionally, sectors like Real Estate. Consumer Discretionary, and Energy are all popping today up +1.86%, +1.48%, and +1.35%, respectively - while Big Tech isn’t too far behind with a nice +1.26% increase on the day. 

For this reason, Wall Street is already placing bets on more cuts, with the volatile futures market predicting the Fed will slice rates three times by the end of the year. See: Money printer goes burrr…

(Source: Giphy) 

But keep in mind, the Fed is definitely walking on a tightrope here. Because as they try to cool down inflation without sending the economy into a free fall, some economists are still side-eyeing the whole thing, worrying that cuts might make inflation a bad sequel that literally no one asked for. Read: How to Be a Massive Buzzkill by The International Monetary Fund. 

(Source: CNBC) 

So given all of this, what’s the takeaway here in this midday update? Well it’s clear that the sign of the times all point to the Fed hitting the brakes on rates. But still, they’re doing it with the precision of a brain surgeon as they try to keep inflation in check without sending the economy in a tailspin. 

However, regardless of the size of the cut, keep your eyes peeled, because we could be on the brink of another 2020 on our hands - when everything from the market, to conceptions were skyrocketing. What a time to be alive I tell ya… 

(Source: Giphy) 

Stocks.News does not hold positions in companies mentioned in the article.