Rate Cuts Won't Help Stock Market

Everyone is focused on what happens after the Fed cuts rates, but this chart made me realize it might be what came before.

From Acting Man: How Do Stock Prices React to Rate Cuts by the Fed?

It says 140 days on the chart. It's possible the December decline and Fed's dovish shift back then is where that red line falls, or the May decline and the expectation of a dovish shift in June. Even if that interpretation is wrong, the stock market has gained over the past 140 days. The prior examples may not hold much predictive value.

And then there's this lunacy from CNBC: The one reason why the Fed should cut rates ‘four times’ over the next 12 months

The market researcher predicts the Federal Reserve will cut rates not once, not twice — but multiple times starting in July.

His chief reason: Inflation is non-existent.

“Inflation is surprising them to the downside consistently, and the market is telling them that they can cut rates,” the Bianco Research president told CNBC’s “Trading Nation’ on Friday. “The market is pricing in four cuts over the next year —three over the next three [Fed] meetings.”

On Wednesday, the Fed indicated it’d be open to slashing rates next month. Stocks reacted by rallying to fresh highs. The S&P 500 is now on track for its best first half of the year since 1997.

“Trust the market. It wants a lot of rate cuts. It’s been saying that for months,” he said. “They’re saying, ‘Look, you’ve got room to lower rates. Lower the cost of capital and maybe provide more stimulus without the fear of inflation. So, do it.’”

This forecast reflects complete failure by the central bank. Far better for them to hike rates and claim responsibility for a correction or bear market and recession if they want to retain their power, than to admit they have no control over inflation. Once the market realizes they have no power (people are still dense 10 years into global central bank failure), the next step will be realizing they cannot stop inflation.