9/23/2024
By Charles Payne CEO & Principal Analyst

Jay Powell pulled a gangster move, going 50 basis points (bps) and, on top of that, getting Wall Street to cheer the move. I admit I’m more shocked at how quickly the same folks that said such a move was A) impossible and B) would roil the markets are now saying it was cathartic.

Braced for Disaster

Of course, 2024 will go down as the year of the switcharoo, whether political candidates against long-held positions or Wall Street mavens waving pom-poms after the smoke cleared last Wednesday. But remember that only two firms on Wall Street saw the Federal Open Market Committee (FOMC) cutting by 50 bps, and only nine out of 113 well-known economists thought such a move was possible.

The experts' mere thought of a 50 bps cut sent shivers down their spines. On the eve of the announcement, a headline in Forbes screamed, “Brace For Crash And Trillions Wiped Out With Fed Rate Cut.” It was always clear to me and now to everyone that Jay Powell wants a soft landing or he will die trying.

Fast Starts Bad Endings

A 50 bps cut to kick off easing cycles is known as “fast” and has been associated with market downturns and recessions.

The last two fast-fed cutting cycles couldn’t stop recessions or significant market corrections.

To read the full report, contact your account representative or email Info@wstreet.com.

Charles Payne
Wall Street Strategies

Add a Comment!