The Monster Lurking Behind the Fed's Rate Cut VIEW IN BROWSER Happy Halloween, folks! The Federal Reserve just handed Wall Street a Halloween treat – a second rate cut. But behind the sweet headline lies something much scarier. See, the real monster we have to worry about this season isn’t inflation anymore. It’s the job market. Things are beginning to look frightening. (More on that in a moment.) In today’s Market 360, we’ll break down why the Fed had to make this move, what it tells us about the economy’s next phase and where investors should look for opportunities as the rate-cut cycle takes hold. What We Learned From the Fed In a 10-2 vote, the Federal Reserve announced a 0.25% rate cut on Wednesday, the second cut of the year, bringing the federal funds rate down to a range of 3.75% to 4%. Initially, markets cheered. But the sugar rush didn’t last long. Treasury yields jumped, the Dow and S&P 500 slipped into the red and the NASDAQ only barely managed a small gain. The reason? Fed Chair Jerome Powell made it clear that another cut in December is not guaranteed. “Policy is not on a preset course,” he said. “A further reduction in the policy rate at the December meeting is not a foregone conclusion.” He even admitted that there were “strongly differing views” among committee members about the path forward. Powell also noted that inflation has “eased significantly from its highs in mid-2022 but remains somewhat elevated.” He pointed to tariffs as a factor contributing to price increases in some goods, but said the Fed views those effects as temporary – a one-time bump rather than a lasting inflation threat. Alongside the rate cut, the Federal Reserve made another major announcement: It will officially end quantitative tightening (QT) on December 1. That means the Fed will stop allowing Treasurys and other securities to roll off its balance sheet. Instead, it will begin reinvesting those maturing bonds. Simply put, it means the central bank will stop pulling liquidity out of the financial system – a clear signal that policy is shifting to a more supportive stance. And that, folks, is perhaps just as bullish as a rate cut. See, ending QT isn’t just a technical adjustment. It changes how money moves through the system. By halting the balance sheet runoff that has been removing roughly $60 billion to $90 billion in liquidity each month, the Fed is easing funding pressures and allowing reserves to rebuild. That can make it easier for credit to flow, for collateral to circulate and for markets to breathe again. Bottom line: More liquidity means more fuel for risk assets. | Recommended Link | | | | An invention far beyond our current technology — even artificial intelligence — could go live any day now. When it launches, the world economy could accelerate by as much as 250 times its normal rate. But it could also send millions of Americans into poverty. Take these 3 steps to prepare today. |  | | The Monster in the Labor Market In the meantime, as I mentioned earlier, the real monster lurking around the corner is the labor market. During Powell’s press conference, he said the job market is “not declining quickly,” but it is cooling. He also admitted the Fed is watching AI-driven layoffs “really carefully.” The reality is that job openings are falling and layoffs are increasing. Companies are quietly turning to AI and automation to do more with less. Just look at the recent announcements: - Target Corporation (TGT) is cutting 1,800 jobs.
- United Parcel Service, Inc. (UPS) is slashing a staggering 48,000 positions.
- Amazon.com, Inc. (AMZN) just announced 14,000 layoffs – and hinted that more are on the way.
- Paramount Skydance Corporation (PSKY) is laying off more than 1,000 employees.
And that’s just from the past couple of weeks. The headlines make the trend impossible to ignore. The Wall Street Journal warned that “tens of thousands of white-collar jobs are disappearing as AI starts to bite,” while outlets from MarketWatch to CNN and NBC reported sweeping cuts at companies large and small. What’s clear is that AI isn’t just disrupting traditional blue-collar jobs – it’s starting to replace white-collar roles, too. The Economic Singularity If you’ve been following my work at all this year, this isn’t news to you. That’s because I’ve been telling my readers that we’re entering what I call the Economic Singularity – the moment when technology overtakes traditional work. AI is also rewriting how wealth itself is created. Companies that harness AI can now generate more output with fewer people, shifting value away from human labor and into the hands of shareholders. It’s a transformation as significant as the Industrial Revolution, only faster and far more concentrated. That’s why I’ve been warning about this shift for months. The same technology that’s eliminating jobs is also creating enormous opportunities for investors. I’ve identified seven companies that are positioned to dominate this next era – what I call the “Singularity 7.” Each is built to thrive as AI reshapes the global economy. The Fed can cut rates, but it can’t stop this transformation. The only real question is whether you’ll be on the right side of it. Go here to learn more now. Sincerely, | .png)
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