U.Today – Yesterday, the Federal Reserve made a significant decision by cutting the Fed rate by 50 basis points. Officials noted that economic growth held up despite lower job creation and a slight increase in the unemployment rate. Inflation, while still above target, has been moving closer to the Fed's 2% target.
In response to this significant rate cut, markets have reacted positively, with particular growth in the cryptocurrency sector. Investors are closely monitoring the Federal Reserve’s next steps as the central bank continues to assess economic data and risks before considering further interest rate adjustments.
One notable reaction came from renowned financial analyst John Bollinger, best known for creating the Bollinger Bands trading indicator. As market participants weighed the implications of the rate cut, Bollinger acknowledged the statement that rate adjustments should be seen as a return to normality, rather than simply an easing of monetary policy.
What's next?
On the one hand, it is now logical to assume that after taking long positions, there should be no reason for a fall. Geopolitics aside: it is an eternal black swan hovering somewhere nearby. The main risk here is the Nasdaq and the S&P 500, which have never had a normal correction. And if people decide to take long positions now, they can fall much further.
By the way, Powell was asked directly whether there would be a recession, as usually happens after the start of rate cuts, to which he replied quite unequivocally that there were no signs of a recession now.
On the other hand, the average maximum decline of the S&P 500 one year after the Fed's rapid contraction cycle begins is -20.7%, and the average maximum decline one year after the slow contraction cycle begins is -7.4%.
This article was originally published on U.Today
