Republic Risk: Rate Odds

It's insane how this all keeps happening...

Equity Storm Watch Is YELLOW on the S&P 500 and GREEN on the Russell 2000

We’re in Yellow status here on the S&P 500 as we prepare for the Federal Reserve to kick off its meeting on Tuesday on monetary policy. The markets aren’t expecting a rate cut tomorrow, but the general expectation is that the central bank will move as soon as September. 

Naturally, this isn’t a bullish event. Historically, the markets have had serious selloffs in the wake of Fed pivots. But recall that there is something uniquely different about “This Time.” Despite years of inverted rate curves, the market has held up more and more… and we haven’t slipped into an official recession. There’s a reason - we’re borrowing about 7% of GDP to “print” about 3% growth. And we’re seeing a dramatic increase globally in liquidity. Liquidity has expanded by more than 8% since the bottom of the cycle in 2022. As a result, U.S. markets have had plenty of juice. 

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Dear Fellow Expat: 

Good morning. 

What would you think if, whil…