Why you shouldn’t want a rate cut

[] too many traders have fallen into this trap [] [] [] [] All eyes are on the Fed’s Friday speech at Jackson Hole to see if Jerome Powell is going to give any hints about what the Fed’s thinking. “Will they cut? Won’t they cut?” I’ve even seen some news headlines saying that at this point a cut is practically guaranteed — the real question is “how much?” I think it’s all a bunch of malarkey. First of all, inflation still isn’t at the Fed’s 2% target. So if they’re going to cut, they really ought to wait until after the election. Maybe even into next year [like I said the other day](. Anything else is the Fed playing politics. But let’s put that aside for a moment. Why are markets so hungry for a rate cut? Especially when charts like this one show that the market tends to take a nosedive after the Fed cuts rates? [] The answer’s simple: For 12 years, the interest rates were at practically zero. Now that the Fed had their fastest rate hike campaign in history, it’s caught traders and businesses off guard. Most of them are used to the zero rates and they want them back there. But if you ask me, this is plain stupid. It’s basically the market looking for a “sugar high” that’s sure to fade fast. As I said, we still have inflation above the Fed’s target rate, so there’s basically no reason for it. On top of that, it’s a well-known (but often conveniently forgotten) fact that the Fed cutting rates is a sign that they think the economy’s in danger. And that’s why you shouldn’t want a rate cut. Even if the market is on the edge of it’s seat waiting for one. — Geof Smith P.S. With the S&P 500 just over 1% away from a new all-time high… It’s the perfect time to think about [my favorite type of hedged trading strategy](. [] [] All eyes are on the Fed’s Friday speech at Jackson Hole to see if Jerome Powell is going to give any hints about what the Fed’s thinking. “Will they cut? Won’t they cut?” I’ve even seen some news headlines saying that at this point a cut is practically guaranteed — the real question is “how much?” I think it’s all a bunch of malarkey. First of all, inflation still isn’t at the Fed’s 2% target. So if they’re going to cut, they really ought to wait until after the election. Maybe even into next year [like I said the other day](. Anything else is the Fed playing politics. But let’s put that aside for a moment. Why are markets so hungry for a rate cut? Especially when charts like this one show that the market tends to take a nosedive after the Fed cuts rates? [] The answer’s simple: For 12 years, the interest rates were at practically zero. Now that the Fed had their fastest rate hike campaign in history, it’s caught traders and businesses off guard. Most of them are used to the zero rates and they want them back there. But if you ask me, this is plain stupid. It’s basically the market looking for a “sugar high” that’s sure to fade fast. As I said, we still have inflation above the Fed’s target rate, so there’s basically no reason for it. On top of that, it’s a well-known (but often conveniently forgotten) fact that the Fed cutting rates is a sign that they think the economy’s in danger. And that’s why you shouldn’t want a rate cut. Even if the market is on the edge of it’s seat waiting for one. — Geof Smith P.S. With the S&P 500 just over 1% away from a new all-time high… It’s the perfect time to think about [my favorite type of hedged trading strategy](. [] ABOUT US: We believe that the opportunity for financial literacy and freedom belongs to all people, not just those who already have years of investing experience. Prosperity Pub provides an array of educational services and products that will help you navigate the markets and become a better investor. Trading is made simple through our online forum full of trading techniques to give you the best tools to kick-start your investing journey. We offer collaborative webinars and training; we love to teach. No matter the opportunity, we bring together a strong community of like-minded traders to focus on analyzing market news as it’s presented each day. DISCLAIMER: FOR INFORMATION PURPOSES ONLY. The materials presented from Prosperity Pub are for your informational purposes only. Neither Prosperity Pub nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational purposes intended is at the user’s own risk. DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. Prosperity Pub is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions. Please visit [( for our full Terms and Conditions. [Unsubscribe]( This email was sent to {EMAIL} by Prosperity Pub 101 Marketside Ave, Suite 404 PMB 318, Ponte Vedra, Florida 32081, United States [Prosperity Pub]( [] ABOUT US: We believe that the opportunity for financial literacy and freedom belongs to all people, not just those who already have years of investing experience. Prosperity Pub provides an array of educational services and products that will help you navigate the markets and become a better investor. Trading is made simple through our online forum full of trading techniques to give you the best tools to kick-start your investing journey. We offer collaborative webinars and training; we love to teach. No matter the opportunity, we bring together a strong community of like-minded traders to focus on analyzing market news as it’s presented each day. DISCLAIMER: FOR INFORMATION PURPOSES ONLY. The materials presented from Prosperity Pub are for your informational purposes only. Neither Prosperity Pub nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational purposes intended is at the user’s own risk. DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. Prosperity Pub is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions. Please visit [( for our full Terms and Conditions. [Unsubscribe]( This email was sent to {EMAIL} by Prosperity Pub 101 Marketside Ave, Suite 404 PMB 318, Ponte Vedra, Florida 32081, United States [Prosperity Pub](