Rate Cuts Are Coming… But That’s Not What Has Wall Street Nervous

This Chart Pattern Looks Just Like TIO in Early 2023

Traders who got in early on $TIO saw outsized gains once the volume picked up. We’re seeing something similar again — and it's not on the radar yet.

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Good Morning,

– Truly yours, Fred Frost

📉 Yesterday's Market Recap

Markets took a cautious stance yesterday, with major indices showing mixed results amid lingering inflation concerns and disappointing jobs data from August. The S&P 500 dipped slightly, reflecting unease over lofty earnings growth expectations, while select sectors like gold equities continued to shine.

• S&P 500 Pricing Optimism: Current pricing assumes a 15% annualized earnings growth over 5 years, far above the historical 7% average. → Seeking Alpha


• Goldman Sachs Long-Term Gains: A $100 investment in GS 20 years ago would be worth $662.89 today with a 9.87% annual return. → Benzinga


• Paycom Software Growth: A $1,000 investment in PAYC a decade ago would now be $5,609.26, boasting an 18.91% annual return. → Benzinga Insights

📉 Daily Performance Snapshot

🔭 What to Watch Today

Today’s agenda could sway markets, with the Fed’s decision leading the charge. (As you can tell, we) Keep an eye on these events for potential ripples in your portfolio.

💡 Opportunity Watch

With policy shifts and tech innovations in play, a few sectors and stocks are flashing potential. Here’s where I see upside amid the noise.

• Coinbase (COIN) - Crypto for AI: Stablecoin integration with Google’s AI payments protocol could drive adoption. → Benzinga
• Alibaba (BABA) - Cloud and AI Growth: Despite e-commerce woes, 26% cloud revenue growth signals long-term value. → Seeking Alpha
• Kroger (KR) - Price Cut Strategy: A ‘Buy’ upgrade and 1% pre-market surge reflect gains from consumer-friendly pricing. → StockTwits

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🔥 The Big Bullet

Fed Rate Cut Expected, but 2025 Outlook Looms Large

What happened: The Federal Reserve is widely expected to cut interest rates at its next meeting, according to a report from CNBC. This would mark a shift after months of rate hikes meant to tame inflation. But the real focus isn't on this move—it's on what comes next. With the 2024 election behind and economic signals mixed, investors are eager to hear how the Fed plans to steer policy into 2025. Adding pressure, some fear political interference could shape the Fed’s messaging and decisions.

Why it matters: Rate cuts typically lower borrowing costs, which can boost consumer spending, business investment, and stock prices. But markets aren’t just reacting to the cut itself, they’re digesting what it means for inflation, earnings, and Fed independence. The timing is delicate: inflation has slowed, but not disappeared. Meanwhile, political rhetoric around the Fed is heating up. Any signal that policymakers are backing away from their inflation-fighting stance could rattle investor confidence. Markets have already shown signs of caution, with the Dow, S&P 500, and Nasdaq all finishing lower ahead of the decision.

What’s next: All eyes will be on the Fed’s forward guidance—especially its economic projections for growth, inflation, and future rate moves. Investors will look for language around how long rates will remain at current levels and whether further cuts are likely in early 2026. The political backdrop could also become a larger factor, as the Fed attempts to balance transparency with independence. If markets interpret the Fed’s outlook as too dovish, it could spark concerns about inflation resurging. Conversely, a more cautious tone may disappoint investors hoping for faster easing. The next few Fed meetings—and the press conferences that follow—will be key to gauging how confident the central bank is in its soft-landing narrative.

• What forward guidance means and how central banks use it to shape expectations about future policy – Federal Reserve
• How the Fed’s independence works legally, why it matters, and what could be at risk if political pressure increases – Brookings
• How the Humphrey’s Executor case historically protects Fed governors from political removal and why recent events are bringing that precedent into question. – Business Insider

🧭 Policy & Market Ripples

• FDA Targets Telehealth Ads: Over 100 warning letters were sent to drugmakers and telehealth firms like Hims & Hers for misleading weight-loss drug promotions. Shares of Hims & Hers dropped 6.47% after the news. → Fortune
• Coinbase Hack Fallout: A $400M breach tied to rogue employees at an Indian outsourcing firm compromised data of 69,000 customers. Legal battles are heating up with TaskUs in the crosshairs. → Fortune Crypto
• RTX Secures $670M Navy Deal: Pratt & Whitney Military Engines won a contract modification for F135 propulsion system spares, signaling steady defense spending. → Seeking Alpha

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