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1/ Everything you believe about Fed rate cuts being "good" for stocks is predicated on stocks being in a bull market.
The Fed eased persistently through the 2000-02 & 2007-09 collapses. By March 2009, the S&P 500 had given up its entire total return vs T-bills since May 3, 1995.
The Fed eased persistently through the 2000-02 & 2007-09 collapses. By March 2009, the S&P 500 had given up its entire total return vs T-bills since May 3, 1995.
2/ When investors are inclined to speculate, safe low-interest liquidity is a hot potato, so it amplifies the speculation. When they become risk averse, safe low-interest liquidity is a desirable asset rather than an inferior one, so creating more of the stuff does nothing.
3/ So your response to Fed policy should key directly off of the condition of market internals, which remain ragged here. My key error in recent years was that even historically-reliable "overvalued, overbought, overbullish" extremes were irrelevant if internals were favorable.
4/ Once investor psychology shifts to risk-aversion, extreme valuations that were previously tolerable become vulnerable to waterfall collapses. On measures best correlated w/actual returns, the *highest valuations ever seen at a bear market low are over 50% below current levels.
5/ That's the difference between durable returns (those driven by growth in representative cash flows) and transient ones (those driven by speculative runs to extreme valuation). Presently the strike price of your "Fed put" is about 1150 on the SPX. About -62% below recent highs.
