Know Your Risk Podcast Reacting to the Fed Cut
Sep 17, 2025
Hosts dive into the recent Fed rate cut, breaking down market reactions and the implications of the dot plot's conflicting projections. They discuss pressing issues like labor market uncertainties and rising rents alongside weak housing starts. The conversation shifts to strategic movements with TikTok and NVIDIA, analyzing how trade dynamics with China could reshape the tech landscape. Finally, they highlight potential market risks tied to corporate behaviors and passive investment flows, underscoring the need for vigilant risk management.
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Dot Plot Shows Conflicting Fed Views
- The Fed cut 25 bps as expected but commentary and the dot plot revealed conflicting views across members.
- The median projects more cuts this year while forecasting higher inflation and slightly stronger growth, an incoherent mix.
Discard 50bp Cut Forecasters
- Avoid trusting anyone who loudly predicted a 50 bps Fed cut; that view misunderstands current Fed mechanics.
- Remove such pundits from your trusted list before making financial decisions.
Conflicting Data Raises Policy Mistake Risk
- Chaotic, conflicting data environments historically increase the risk of policy mistakes.
- Zach thinks the Fed is on the precipice of a policy mistake because key data (like employment) is unreliable.