Alright, this might sound like one of those Uncle Rico stories from Napoleon Dynamite, but stick with me. Back in high school, I had this basketball game where I was absolutely on fire. 

I couldn’t miss. I’m talking three-pointers from everywhere, and I ended the game with 40 points. At one point, I crossed up the guy guarding me so bad, he fell over. The other team was so rattled, they threw three defenders at me in the 4th quarter, full court, just to keep me from touching the ball. And then, after the game, my dad hits me with the classic "constructive criticism" talk—like, seriously, dad? I just had the game of my life!

Fast forward to today, and it feels like some financial analysts are pulling the same move after the Fed’s first rate cut in four years. Just like my dad couldn’t let me enjoy my moment, analysts like Michael Hartnett from Bank of America and UBS are playing “Johnny Raincloud” after Jerome Powell’s decision to cut rates by half a point. According to them, this move could set us up for a major bubble (of course right?).

So, the Fed cuts rates, and what happens? The stock market goes wild. The S&P 500 shoots back to record highs, and the Nasdaq 100 has its best day in over a month, gaining 2.6%. But analysts like Hartnett are stepping in to say, “Not so fast.”

Michael Hartnett, over at Bank of America, is doing his best “get off my lawn” impression, warning that this rate cut might be too good to be true. He’s all worked up because the market is now pricing in 18% earnings growth for the S&P 500 by 2025, and according to him, that’s got “bubble” written all over it. And what’s his big solution? Buy bonds and… wait for it… gold. Yep, the shiny metal that’s apparently still relevant in 2024.

I mean, come on, Hartnett. Gold? What is this, 1849? Should we all start panning for nuggets in the river too? He’s out here acting like gold is the only thing that can save us from a recession or runaway inflation. But hey, if digging through your attic for grandma’s old gold coins sounds like a good time, go for it. Hartnett’s also suggesting that maybe we should cool off on U.S. stocks and take a look at international equities and commodities, which, according to him, aren’t as overheated.

(Source: Bloomberg)

If Hartnett's warning didn’t dampen the mood, UBS is here to hit us with the reality check no one asked for. They’re not just worried about rate cuts—they’re concerned that the Fed might be going too far, too fast, and setting us all up for a big, messy stock market bubble. 

Their reasoning? Sure, historically, markets tend to go up 4% in the eight months after a rate cut. That’s the fun part. But then they hit us with the “there’s a 55% chance a recession could follow”—which, let’s be honest, sounds about as reassuring as your local weatherman saying there’s a 55% chance of rain. In other words, flip a coin and hope you’re wearing the right shoes, because if the recession hits, the market can drop by 10%.

But UBS doesn’t stop there. They’re predicting the Fed Funds rate could settle around 2.8%, which sounds reasonable... until you consider what happens if the Fed gets too aggressive and cuts it even lower. That’s when the bubble pops and we’ll all be standing in soup lines like the Great Depression.

(Source: The Seattle Times)

So, should we actually pay attention to these recession warnings? Honestly, I’ve been hearing the “markets are overvalued” argument for what feels like forever. At this point, it’s like that one guy at the bar who’s always talking about how Bitcoin is going to crash—dude, we get it, but you’ve been wrong for years. It’s hard to take seriously anymore, but hey, at least it gives us something to laugh about and turn into content.

P.S. On Thursday, we released an alert exclusively for our premium members, and by market close, the stock skyrocketed 140.45%. If you missed this one, don’t worry—you don’t have to miss the next. Another big opportunity is likely to drop this week. Click here to become a premium member and get in before the next stock takes off!

Stock.News does not have positions in companies mentioned.