September 18th 2024

Macro Economics

The Federal Reserve plans to cut short-term interest rates on Wednesday, September 18th, which could significantly affect the economy and financial markets. While the stock market is hitting all-time highs, the overall economy is slowing down, as demonstrated by weaker employment, retail sales, industrial production, and a struggling housing market. Cutting rates could provide a needed boost, especially since inflation is dropping quickly, giving the Fed room to act aggressively.

Asset Markets

In the stock market, things get more complex as multiple factors, like earnings, liquidity, and investor sentiment, are in play. Tech stocks led in early 2024 but lost steam as inflation dropped and investors shifted to other sectors. Cyclical industries, especially home builders and real estate are expected to benefit most from rate cuts. Defensive sectors like utilities, consumer staples, and fixed-income bonds are also strong, as they perform well when the economy is sluggish. Small-cap stocks with high volatility are a hot topic among analysts. The big question remains: will the Fed's rate cuts be enough and on time to help the economy rebound? If they are too late, the economy might slow further, making bonds a safer bet. Ultimately, the Fed's actions will increase liquidity and money supply to stimulate growth, but the timing and impact remain uncertain.

The liquidity picture looks to be improving

Stay tuned for more updates!

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And that’s a wrap! Let’s hope the Fed makes the right move and helps boost our sluggish economy. Until next time! We've embedded video to satisfy your visual brain!