🚨 MARKET ALERT: Rate Cuts Are Coming 🚨
📉 Headline inflation has cooled to a nice 2.4%, heavily aided by an 8% year-over-year drop in gasoline prices. But don't be fooled by the rosy narrative—everyday costs are still soaring, with ground beef up over 16%, home healthcare up 12%, and public transit up 5%.
Despite a rock-solid labor market adding 130K jobs in January and unemployment dropping to 4.3%, the Fed's narrative is shifting. Because the labor market doesn't need rescuing, the new justification for cutting rates will be that inflation is finally close enough to their 2.0% target.
🗓️ The Rate Cut Timeline: Watch June 17th
Don't expect immediate relief. According to the CME FedWatch tool, there is a 90.2% chance rates stay flat at the March 18th meeting, and a 71.5% chance they hold steady on April 29th—Jerome Powell's likely final meeting.
However, the odds drastically flip by the June 17th meeting, showing a 68% chance of a rate cut. Why the sudden change? 🧐 The market expects President Trump's likely new Fed Chair nominee, Kevin Warsh, to take power in mid-May and immediately do the administration's bidding—signaling to markets that the Fed is no longer independent.
💻 Tech Stocks & The AI "Moat" Warning
While money printing and rate cuts generally boost stocks, don't get a false sense of security with tech and software. You must ask yourself: Which companies will AI make obsolete?
⚠️ Vulnerable: Companies without "moats" like $DUOL (Duolingo) are suffering because free AI platforms can now provide better, highly customized language lessons for free.
🛡️ Resilient: Companies with massive physical infrastructure, like $AMZN (Amazon.com Inc) have real-world logistics moats (trucks, airplanes, physical warehouses) that software alone can't replicate, and they are already using AI to make their operations more efficient.
🥇 The Clear-Cut Winner: Gold
Lower interest rates mean savings accounts will offer measly yields, forcing investors to seek better returns elsewhere. Add in the ongoing global de-dollarization and massive money printing, and gold is perfectly positioned to catch a massive tailwind in the coming months.
When investing in the stock market, don't blindly buy cheap tech or software stocks just because upcoming rate cuts generally boost the market. You must evaluate if AI will make a company obsolete.... Show More
Not investment advice. The author may have financial interests in the mentioned instruments.
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