Are people vastly misunderstanding the meaning of the rate cuts?

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It’s really a question of whether a recession is coming or not.

When the Fed cuts rates, it is often to prevent the economy from going into recession or trying to get us out of one. The 50 point cut has some believing that the Fed knows the economy is weaker than we think and needs more stimulation, thereby increasing likelihood of a recession.

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If we avoid a recession the rate cuts are bullish for the stock market. But we have no way of knowing this, hence the worry.

That said, bull markets “climb a wall of worry” and this market still acts very bullish. The more people that park their money in HYSA, the more that money will flow into the stock market as it rises due to FOMO.

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It’s when nobody is worried and everyone is complacent about the stock market that I start to worry…

h/t Rav_3d

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