02/09/2024
Equities often perform well when the Fed begins cutting rates, but caution is warranted if economic growth is weak—it could lead to a different outcome. 😱
As we've emphasized for months, markets tend to enter these periods with some weakness, but a significant structural shift usually follows the rate cut. The pace of the cuts also matters—25bps might indicate a steady slowdown in economic activity, while 50bps could signal more of a panic, similar to what we saw in 2001 and 2007.
Remember, FOLLOW THE STRUCTURE, NOT YOUR GUT!
Source: Goldman Sachs