Here's how the S&P 500 has performed in the past after the Fed starts cutting rates
Source: Evan @StockMKTNewz
🚨Jerome Powell and the Fed just cut rates by 0.25% down to between 4%-4.25%. Here's a high level summary 👇
➡️ RATES: The Fed cuts key overnight interest rate by 25bps to 4.00-4.25% range Fed projections show additional 50bps of cuts by year end, another 25 bps of cuts in each of the next two years. Fed says it is attentive to both sides of dual mandate ➡️VOTE SPLIT: New governor Miran dissented on policy decision, favoring 50bps cut. So only 1 dissent is positive. The Fed is remaining unified under Powell 😊 POWELL: "There wasn't widespread support at all for a 50 bps cut today." ➡️LABOUR MARKET: Says downside risks to employment have risen Job gains have slowed, unemployment has edged up but remains low ➡️INFLATION: Inflation has moved up and remains 'somewhat elevated' ➡️ECONOMY: Economic growth moderated over first half of this year ➡️ BALANCE SHEET: Fed maintains current pace of balance sheet drawdown ➡️SUMMARY ECONOMIC PROJECTIONS: GDP forecasts raised for 2025, 2026 and 2027 Unemployment rate forecast for 2025 unchanged, lowered for 2026 and 2027 PCE forecast for 2025 unchanged, raised for 2026, unchanged for 2027 Core PCE forecast for 2025 unchanged, raised for 2026 and unchanged for 2027 ➡️DOTS: The dots for 2025 were massively shifted lower with one member calling for 5 cuts in 2025. 7 of the 19 members see no more rate-cuts this year... 9 of 19 see 2 more cuts 2 of 19 see 1 more cuts 6 of 19 see no more cuts 1 sees 1 rate hike 1 sees 5 cuts (this is Stephen Miran) ⚠️Fed Funds rate forecast cut for 2025 from 3.9% to 3.6% or another 2 rate cuts. ⚠️The central bank gave a more hawkish outlook for rates in 2026, where officials are predicting only one more rate cut in the new year, slower than the current market pricing of two-to-three. The median forecast for 2026 pencils in just one more rate cut, after the two further moves this year. ⚠️ And then another cut in 2027 to 3.1% That would mean 125 basis points of cutting from September 2025 until the end of 2027. This way short of the 300 basis points Trump has wanted for, like, now. 📌 In a nutshell: The Fed is cutting rates, and projecting more rate cuts, at the same time as upgrading its growth forecast and nudging up its inflation outlook too... And now the HAWKISH 🤢 side of today's decision and ensuing press conference >>> Powell just said during his press conference after the decision he sees the move as a “risk-management cut.” Powell’s comments suggest this move was more of an insurance cut in case the economy dramatically slowed. Source: zerohedge, CNBC
11 of 12 members voted in agreement with this decision.
One fed official (Stephan Miran) penciled in 150 bps of rate cuts for 2025.
"THE MOST IMPORTANT FOMC OF OUR LIFETIME"
$SPY S&P500 is completely flat
USD is coming back
Source: Barchart
Yesterday’s FOMC statement, interpreted through a large language model, was the most dovish since 2021.
Source: Augur Infinity @AugurInfinity
Activist investor Cevian Capital has said it is “not viable” to run a large international bank from Switzerland due to new strict capital proposals
Unless the position changes UBS would have “no other realistic option” but to leave the country. Cevian is Europe’s largest dedicated activist investor and holds about 1.4 per cent of UBS’s shares. It added that the government proposals, which would force the bank to have as much as $26bn in extra capital, could not be meaningfully changed through lobbying efforts. “The board has the responsibility to ensure that UBS protects its competitiveness,” Lars Förberg, Cevian’s co-founder, told the Financial Times. “Under the current proposals, it is not viable to run a big international bank from Switzerland. We therefore see no other realistic option but to leave.” He added: “The message from the Federal Council is clear: UBS is too big for Switzerland . . . I respect the Federal Council’s decision, but I do not understand it. It cannot be undone. Lobbyists cannot change that either. That effort can be spared.” Link to article: https://lnkd.in/ekU4KnUE
Despite some hawkish comments during the Press conference (the "risk management cut"), the Fed now seems more worried about the job market than inflation.
Next job data will be key. Source: zerohedge
