by Sean Ring
Daily Reckoning
Yesterday, the Federal Open Market Committee (FOMC) shocked most market watchers, including yours truly, with an aggressive 50 basis point cut, a mostly unexpected move. The Fed’s decision, which saw Governor Michelle Bowman dissenting, raises serious questions about the stability of the U.S. economy. The stark contrast between the cut and the rhetoric leading up to the meeting signals more than just a recalibration of monetary policy. It signals fear.
For months, Fed Chair Jerome Powell and his colleagues have emphasized that inflation remains stubborn, necessitating tighter policy for longer. But the sudden 50 bps cut suggests the Fed sees something behind the scenes that has them spooked—and it should have the rest of us spooked, too.
Let’s break down why this move reeks of panic, what Bowman’s dissent tells us, and why this could be the sell signal that stock market bulls desperately want to ignore.