To The Moon

🌟🌟🌟To cut or not to cut - that is the eternal Fed soliloquy and a trillion dollar question.  Let's channel our inner Shakespeare and Powell in one go:

Act 1: The Setup

The Fed's September 17 meeting is shaping up like a high stakes drama.  The labour market has just coughed up a weak jobs report - only 22,000 jobs added in August and unemployment is nudging upward.  That is Powell's cue to enter the stage with a rate cut sword.

Meanwhile inflation is still lurking in the wings.  CPI is projected at 2.9% with core CPI at 3.1%.  Not terrifying but not exactly roses and sonnets either.

Act II:  The Decision

25 bps cut?  Almost guaranteed.  The Fed Watch tool shows a near certainty.  It is the gentle nudge approach - like whispering sweet nothings to the economy.

50 bps cut?  A spicy 14% chance.  That is a bold leap - dramatic, risky and possibly too soon.

No cut?  That is practically off the table.  The audience would boo.

Even JPMorgan is betting on a 25 bps cut despite CPI risks.  The Fed seems more worried about employment than inflation right now.

Act III:  The Aftermath

Here is where it gets exciting :

Markets have priced in the cut, so the real drama begins after the curtain falls.  VIX futures are flashing warnings.  September looks calm but October could be a storm. 

If CPI surprises to the upside, the S&P500 could drop 1.5% to 2% according to JPMorgan.

If CPI is tame, equities might rally but the Bull could be running on borrowed time. 

Final Scene 

If you have already ridden the breakout, Sep might be your cue to take a bow and trim some gains.  Not because the audience is getting restless.  The Fed's cut may be priced in but the volatility curtain is about to rise.

So yes - to cut or not to cut - the Fed will likely cut.  But to profit or not to profit?  That is your line to deliver.

Powell's rate cut is coming but I am not waiting for the encore.  September is for pruning, not pining.  Let's hope that September is our "sip champagne and sell strength" moment.

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