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Unusual Whales Pod 42: Fed CUTS RATES by 50BPS, the FIRST Reduction since 2020
Unusual Whales
Weak Currency and Market Turbulence
Aggressive rate cutting may lead to a weak currency, especially for a country with a significant fiscal deficit. This scenario poses risks to financial markets, particularly for foreign investors holding US equities, as a depreciating dollar could incentivize selling to avoid currency losses. Additionally, a weak currency typically raises import costs, contributing to inflation and higher commodity prices. Consequently, the anticipated positive effects of rate cuts might not materialize under the current financial conditions, potentially leading to negative outcomes for risk assets.
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