Here’s the Real Reason Why the Fed is Cutting Rates

I challenged you to think about why the Fed was cutting rates earlier because on paper thing are good.

Unemployment is low
Sales are strong
Profit margins are good
Stocks are near record highs

It’s a curious thing to need to cut rates when at record highs. But beneath the veneer is a categorically odious facade.

A debt maturity wall looms in the literal sense.

If the Fed doesn’t start to cutting rates soon and fast, then a wide swath of companies might go bust, facing quadruple the amount of debt maturities from now till 2028.

That’s all this is, financial engineering and the Fed, for once, getting ahead of the curve. If done right, we might all benefit from this and perhaps create another giant bubble to worry about by 2028.

Originally I wanted to be in cash but then changed my mind, thinking about the wondrous gains to come and to be enjoyed at the opening trade tomorrow. The way I figure, the market will be calm up until the Fed announces and then PANDEMONIUM WILL BUST LOOSE, with sending stocks to the moon or collapse it into hell.

I’d like to play a minor role in the foreboding drama to come and will soon extricate myself from the market place. Essentially, I’m in for a few hours and then gone, a whisper in the wind: totally analog.

The way I see it, traders were given pagers today and tomorrow will blow up, cocks and balls strewn across Wall Street to look like a Jackson Pollock painting. Yes, that was a double entendre, if there ever was one written.

Good day.

This morning there were reports that thousands of Lebanese were injured, 300 critical, 8 dead, in what appears to be an attack on “Hezbollah”. In actuality, I cannot trust or believe anything western media says, so to say these pagers only belonged to evil terrorists is extremely surface level, basic, retardation. An act like this is the definition of terrorism and is designed to compel Hezbollah and Iran to wage war against Israel. We have seen attack after attack and no palpable response from Iran as of yet. I do believe a child and the Iranian FM to Lebanon was injured in this attack.

What this achieves for me is looking at my fucking iPhone, wondering if this fucking thing could be hacked to explode on me at a time and place of someone’s choosing. If I drove a Tesla, perhaps they could hack that too and make it blow up a fucking building.

Did they really hack 1990s pagers to overheat and blow up or were these fuckers rigged with c4 in some chicanery between Motorola and I am guessing Israeli state actors? Who else would want to do this? Let’s be honest.

Many on X are celebrating this “attack” because “terrorists” were killed in what appears to be a very “cool” James Bond like Hollywood production. You people are fucking morons. Your iPhones will one day be used to blow off your cocks, and then they’ll just say “that fucker was a terrorist” and half of X will then celebrate your evisceration.

It’s a death cult.

Retail sales came in strong today, one day before the Fed must decide between cutting by 25bps or 50bps. I don’t get it. Please explain to me why we are cutting rates, other than the fact the govt cannot afford to carry the interest on the national debt.

Ohhhhhh. That’s right.

I went to cash and only hold a 5% $TSLA position, +115bps for the session. I might trade or I might not. I just feel like not being in the market at the moment.

Most of you are busy watching the FOOLSBALL game stuffing your fat faces with hot dogs. I can’t stop thinking about the looming rate cut and what it might mean for markets. This is mostly due to only being +12% YTD, which is partly due to the fact that during the May Fed meeting I got bagged for 5% in a single session whilst moving my daughter out of college in Boston, an awfully petty excuse for lacking but an excuse nonetheless.

And now with me about to re enter the field of money management, I am taking 5 to 6 calls per day and very much distracted and not “plugged in” like usual. But I can still make deductions and I have been wondering about this fucking rate cut, which is the first of its kind, literally.

We had one minor cut in 2019 and it bagged markets, but it was a one off event. The 2020 cut of 100bps in March was when the world was ending, so that doesn’t count. Prior to that we had the fucking cuts of 2007 to 2009 that sent rates to zero and before that we had some dot bomb era cuts circa 2001 to 2003 and before that was the Asian contagion/LTCM crisis of 1997 and before that was 1987. Do you see what I am saying here?

The only time in recent history the Fed cut rates during a good economy and without crisis was in 1971 and that eventually rolled into hell from 1973 to 1974.

Some are offering warnings about the yield curve “disinverting”, implying that it is a precursor to a special kind of doom. But the only two times, at least in recent history, of the yield curve disinverting was March of 2020 and then 2007. I do not believe this to be an apples to apple comparison.

So what is it? Why the fuck are we cutting rates now, after working so hard after so many years to get rates back to historically normal levels? Moreover, if the Fed comes in with 50bps will markets freak out, wondering if the Fed knows something markets don’t and if only 25bps, will the market whine and bitch about it not being enough?

In other words, this might be a sell the news type of event.

For your reference, I looked back at previous cuts and isolated which sectors did best. However, I must preface this with the same previous bias that this is not an apples to apples comparison. These rate cuts to come are unique and in a class of themselves.

Best performing sectors in 2020 cut:

Bitcoin, Biotech, Retail, Energy, Regional Banks, Gold

2019 cut:

Treasuries, Gold, Utilities

The bull case for an extended series of rate cuts points towards multiple expansion in numerous areas of the market, one of which might be biotech. This is an area of the market I like to consider a “black box” due to the meaningless nature of most of the constituencies, basic beggars in search of capital in order to concoct new mysteries in the medical space. Traditionally, the biotechs without revs or earnings do fantastic in cheap credit environs, since money is bountiful and easy to attain. It’s worth highlighting this area. of the market because it has been overlooked, with marked exception of and for the absolute fatties taking colon blocking drugs, FORCED CONSTIPATION because they don’t have it in them to exert a modicum of discipline in their fat and disgusting lives.

Bottom line: due to all of the uncertainty and my busy schedule, I might move to cash ahead of Le Fed, or perhaps just a very large cash position.

I closed down 17bps today due to a leveraged Bitcoin position, as I am intent on enjoying the impending GIGASPIKE. Nevertheless, I feeeeeel rather in control, especially with the Fed about to expand the monetary base.

Being up post Fed isn’t a foregone conclusion and there is a scenario where we “sell the news”, as the randomness of Wall Street endeavors to trick and fool speculators all the time. But on a longer term basis, providing Trump can remain alive, we are bullish on the prospects of multiple expansion.

What the means is exactly what is sounds like.

Corporations have debt and they pay interest on that debt. When rates go lower, they have to pay less interest and that is usually factored in the share prices, measured by PE or PS. This is why we are seeing secular ‘old man’ stocks jimmy higher. Stocks like $CLX and $PG do poorly in a rising rate environ but do much better when they drop.

The entire market should do better, as cheaper credit creates speculative fervor. The rally to come is not limited to stocks, but will also encapsulate commodities, real estate and cryptos too. Fight the FUD and stay focused on what you see, rather than what you believe.

I am 107% leveraged long into Tuesday.

Without getting too much in the weeds, it appears the person responsible for attempting to kill Trump this weekend, Ryan Routh, was a mercenary for Ukraine and active recruiter for the Ukrainian military. He was a prolific donator to the democratic super pac Act Blue and viewed Trump as someone who ought to be killed, rather than run for President.

This sentiment, unfortunately, is shared by many people on the left and we’ve come to a place and time in America where political violence and persecutions are normal practice and it’s only getting worse.

But because of this unbelievable second assassination attempt, I think Trump’s voter base will consolidate and permit him to win the election this November. I think many on the right we waffling with this older Trump due to being less radical than 2016. People want change and they don’t want to hope about it anymore. We are a nation with incredible potential and incredible risk and this is reflected in the stock market almost every single day.

Bottom line: Trump will win this November, in my opinion, and this is bullish for markets. The low hanging fruit is in the financials and Russell 2000. A Harris win doesn’t mean bear market; but it just won’t be like a Trump win, which will almost assuredly get the speculative fervor going again.

Things are fresh in your mind now but soon this recent month of action will pass and you will forget which stocks worked in this oversold cycle, small fears over the Yen increasing in value, other ancillary fears about the valuations of semiconductors.

I do this with all big events, including but not limited to hurricanes, tragedies, wars, liquidity panics, financials crises, recessions, booms etc.

Markets lifted between 4 and 6% the past week, so keep track of notable stocks that did 3x more than that, for future reference. The next time markets slide 10%, you’ll have a go to list of stocks that participate with markets.

Here are some notable ETFs, weekly returns.

$JNUG +30%
$SOXL +29%
$FNGU +24%
$BITX +24%
$TQQQ +18%
$TNA +13%

In Stocklabs, I created a list, cherry picked relevant names according to market cap groupings.

In case you’re wondering, as you eat tuna fish from a can, our mean reversion oversold signal was in fact flawless: SHOMP.

Imagine how retarded you’ll all be once I am gone.

Sirs

Here is a little data for you concerning performance in the month of October for Bitcoin.

You’re probably thinking “this time is different”, but are you prepared to live with that decision? We are bullish in the intermediate term, barreling headfirst into Hallow’s Eve.

My day went as expected, extracted +48bps from the market and closed up 2% for the week. I have been slumping, so it’s good to see a little progress. You have to understand, and let this be known, I am presently at the desk looking at the market maybe 2 hours per day, now that I am “getting back in the biz” and taking calls with prospective investors. For those wanting to inquire, email me at flybroker at gmail.

Other than that, my lawn looks like absolute shit, which is particularly disheartening since I’ve put so much fucking effort into the damn thing. Alas, I might have to just sell this stupid house to escape this lawn. It’s so embarrassing.

Mrs. Fly is at the door now waiting for me to drive her to Whole Foods, where we will spend $500 on a few bags of groceries. After that, I might partake in a little dry gin martini drinking, some light jazz music, and perhaps a small morsel of food to ingest, not too much as I like to avoid being rotund.

I am often harangued by monsters who are permanently short the NASDAQ and always losing money with comments such as “THE BIG CRASH IS COMING” or “YOU’RE SO DUMB BRO, THE TOP IS IN.” Shut the fuck up with your ideologies. I have strong opinions too and want things a certain way; but I cannot manifest these things into existence, you fucking morons.

We have a ripper on our hands and markets like the action, no matter what you think.

We have the Fed coming out next week with cheap money deals, which is going to lead to MULTIPLE EXPANSION, depending on how cheap the money will get.

What does that mean?

Capital intensive companies trade at multiples based on their FCF. With rates coming down and the cost to borrow cheaper, the valuations by which those corporations are valued go up. This is why you’re seeing shares of $CLX and $PG jimmy higher. This has more to do with access to cheap capital than the specter of doom and flight to risk averse stocks. Before making decisions, you should become smart.