September 18, 2024

As I write this SPX is at 5659.47, with a high at 5689.75 after the Fed (Mr. Jerome Powell) has decided to cut interest rates by 50bps.

Markets are volatile with huge 10-20-30pt swings both ways.

Friends, buckle up, tighten your stops, take some profits and let’s see where this ride goes.

Important: Per PBS: “The continued strength of the U.S. economy could require further interest rate increases, Federal Reserve Chair Jerome Powell said Friday in a closely watched speech that also highlighted the uncertain nature of the economic outlook.” - From August 2023.

Doing some inverse thinking as the late great Mr. Charlie Munger would do, if a strong economy allows for gradual increase rate increases of 25bps, what does a 50bps interest rate cut signal?

It is very important to play it safe now that we have our first interest rate cut in a relatively new environment of high interest rates.

Mr. Howard Marks states we have entered a new environment and I agree with him ; the next 3 months will be key to how we start 2025 in terms of capital allocation. Utilities (XLU) are up 22% YTD, and the Financial sector (XLF) is up 20% YTD ; QQQ (Tech) is up only 18.36% YTD, and SPY (SP500) 19.69% YTD.

Stay safe, friends!

Disclaimer: Please note that all information shared here is for informational purposes only and not intended as financial advice.