With only hours remaining before the first Fed rate cut of the cycle, traders are still uncertain about the size of the rate cut. Is the Fed willing to brave a big move? I will be shocked if the Fed goes for 50 basis points. It is striking to see some of the same pundits who were doubting the chance of any rate cuts just a couple months ago are now betting for 50 basis points or the Fed may fall behind the curve.
Never mind, I grabbed this report from a partner that could be of interest to anyone with capital taking a nap in money market accounts, just itching to jump back into the stock market soon.
Here is a section:
The interest futures market is now certain that the Fed will embark on a new rate cutting cycle at its next meeting, with 100bps of cuts now forecast in the three meetings before year end. We have analyzed the previous 11 Fed cutting cycles since 1970. As might be expected, the average annualised cutting cycle return has been outstanding (+16%).
There is, however, a more mixed picture looking at equity returns in the immediate aftermath of the first cut, with an average return of just +1% in the first 3 months. It might be prudent for investors to keep dry powder.

These first few months of a new cutting cycle will also see heightened political risk with the US Presidential election on November 5th. Although the mainstream media likes to focus on the personalities of the candidates, it is more useful for investors to study the differences in the economic agenda.
Trump, ironically, is now something of a known quantity with an agenda to reduce corporation tax to 15% for homegrown companies and fund this by raising tariffs on imports (10-20% across the board and 60% on Chinese goods). This was standard Republican economic policy throughout the nineteenth century.
Harris, by contrast remains something of an unknown quantity, having been parachuted in as a last-minute replacement, when after four years of vigorous service, President Biden, following a poor Presidential debate, was suddenly discovered to be senile.
In so far as Harris has been willing to reveal her agenda, she proposes rescinding Trump’s 2018 personal tax cuts with additional taxes for those earning more than USD400,000, raising the corporate tax rate to 28% and increasing capital gains tax from 20% to 28%; with a 25% minimum tax on those with wealth above USD100 million (including unrealized gains).
She has also proposed a doubling of the federal minimum wage, quadrupling taxes on share buy backs, banning non-existent “price gouging” and expanding antitrust enforcement. Whereas Trump supports cheap and reliable energy, Harris will extend “renewable” subsidies.
Neither Trump nor Harris sought to appeal to the middle ground by appointing a more conciliatory candidate as their Vice-President. It therefore would be understandable if major business decisions were postponed until the outcome of the election and the full agenda is known.