Fed Rate Cut: Is It Too Late? | Macro Alf
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Navigating Asset Positioning Amid Federal Rate Cuts
Cutting interest rates does not necessarily boost stock markets, as evidenced by the 2001 experience when significant rate cuts led to a 15% market decline. Rate cuts are supportive primarily when the economy is stable. The Federal Reserve's potential delay in rate cuts may not favor risk-on assets, indicating a challenging environment for equities and bonds. There's a growing discourse around cryptocurrencies, with some experts suggesting they should position themselves as money-printing resistant assets, akin to gold, rather than being seen purely as risk-on investments. Despite previously demonstrating low correlation to traditional assets, cryptocurrencies have become increasingly linked to specific equity factors, altering their utility within multi-asset portfolios and reflecting the current economic sentiment.
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