The rate cut they announced, that’s the distraction but essential to reduce the impacts of the debt maturity wall, which would also drain liquidity.
The real news I’ve been waiting for is finally here: Money printing is officially back! Perfect timing really, given my worry for a liquidity event.
They’re calling it some boring name like “reserve management purchases,” but let’s be real. When they print $40 billion a month to buy bonds, it means one thing: A nice wash of cash is heading into the markets. You might not call it QE, but I’m not sure anyone isn’t going to connect the dots. Half a Trillion a year at this level but I expect them to keep it elevated for longer than they let on. Just for some context, the crazy Covid print was around $5 trillion.
🟢 Here’s the takeaway (and what I’m doing):
-BULLISH on risk assets. Every time the Fed pumps liquidity, stocks go nuts. This could be offset with other central banks starting to slow down a little but this is something to monitor with global liquidity levels.
-CASH IS TRASH. I’m staying 100% invested. Holding cash right now is a guaranteed way to lose purchasing power as inflation heats up and rates drop.
-WHERE I’M LOOKING: Focus on the best quality growth. Think AI, Tech, and Software. Focus on secular trends set to build over the next 5 to 10 years. That’s where the fresh money flows first.
-RISK: Inflation could start to move up and we must watch this level closely. A significant jump in this area and were back to QT and no cuts. I do think were in a good position right now and I’m not directly concerned about this for the time being. Liquidity is still my primary worry.
Little note here, this was the most divisive vote I’ve seen in my life. Currently wouldn’t bet on getting another cut at the next meeting and so far the dot plot has confirmed one cut for 2026. I’m calling hog wash on that but well know more as we get more data. Sorry to be cliché 😛
The rate probabilities also seem to be calling the bluff on the dot plot too, as you can see in the attached image at the top of the page.
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@jodyslaney with CISI Lvl 3 Wealth & Investment Management
🟢 Disclaimer:
The views expressed above are my personal opinion and do not constitute investment or financial advice. Please remember that your capital is at risk, and past performance is not a reliable indicator of future results.