Don't think that once the interest rate cuts are in place, everything will be fine — the real risks lie in the speeches following the rate cuts.
This rate cut was completely forced, not something Powell wanted.
Key times: Rate cut at 3 AM on Thursday → 3:30 Powell's speech
I expect he will send extremely hard hawkish signals to pave the way for "no rate cuts in the future."
In a word: When it's time to scare the market, he never holds back.
Why will it be hawkish?
After the rate cut, the interest rate will reach the 3.5% "neutral rate" range, no longer considered a restrictive rate.
But inflation is still at 3%, well above the 2% target.
Economic data is also not bad, and the Federal Reserve has no reason to continue cutting rates.
This is consistent with Powell's previous attitude: if he can avoid a cut, he absolutely will.
My judgment
After the rate cut next week, the market may take a sharp downturn, initiating a period of deep correction.
My personal strategy:
Build long positions 2-5 times on highs
If you prefer stability: do not act, wait for next year's crash to buy the dip
Why wait for next year?
Because the second half of next year is very likely to truly welcome the "tap" opening:
Trump will appoint a new chair after taking office
The new chair is very likely to adopt an aggressively loose policy
Crazy rate cuts → Liquidity returns → 3–5 year major upcycle
In simple terms:
Now is the calm before the storm, next year is when the east wind will rise.
