📈 Rate Cuts

What will the market do after the first cut?

Rate Cut Performance

While we don’t know for certain when rate cuts are coming, the odds are in favor of a cut in September.

Once we do see a cut, how will the market perform?

Bloomberg released this chart that tracks market performance after the first rate cut historically:

You can see that even though we think about cuts being bullish for the market, it doesn’t necessarily mean that we always see the market push after the start of rate cuts.

The question is: which of these years is our current context most similar to?

While the can be argued, I believe that we are in a similar context as 1995 and 1998. During that time, we had the rise of the Internet and the dot com bubble. It was new technology and we didn’t fully know how business would take advantage of it.

Right now, AI feels like it is in a very similar place. We know that it is projected to increase both efficiency and output for businesses, but we don’t yet know the full impact it will have.

Because of that, I would expect performance to fall in a range similar to 1995 and 1998 after cuts.

Watch the below video where I build out my thesis further: