SEPTEMBER FOMC BIG CUT PIVOTING BACKGROUND

SEPTEMBER FOMC BIG CUT PIVOTING BACKGROUND - STABULOUS FIRST STEP TO IMPLEMENT 100 basis point rate cut before 2025 with great economic and political uncertainty

2024
9/17-18: September FOMC 4.75-5% (50 basis point cut)
11/5: U.S. presidential election (Trump v Harris)
11/6-7: November FOMC 4.5-4.75% (25 basis points cut)
12/17: Electoral votes officially confirm next president, vice president
12/17-18: December FOMC 4.25-4.5% (25 basis points cut)

The year of 2025
1/20: The next president, vice president, begins his term
1/28-29 : January FOMC

Case 1: Gradual interest rate cuts in Harris' term depending on the economy and the price environment
Case 2: FRB's current regime lame-duck suspends interest rate cuts during Trump's term

Contrarian view - A 100-bp rate cut, including a big cut in the FOMC in September 2024, has been fully reflected in rising stock prices, falling interest rates, and weak dollar so far. From now on, it will be sensitive to the opposite signal. For example, when economic indicators are strong, interest rates rise, interest rate-sensitive stock prices fall, dollar strength and risk off mode

BUZZ-Only profit-taking focused, economic or interest rate sensitive sectors or firms buy in installments through end of 2024

BONDS-Focused on realizing capital gains in 2024 Capital arbitrage accounts. Establish carry position after normalization of Yieldcurve after Neutral Flattening (expanding short-term bonds, reducing mid- to long-term bonds) (approximately 4% of U.S. Treasuries in 10 years is likely to be the benchmark)

FOREX-Dollar volatility not expected to be significant; watchful for signs of yen carry liquidation

Precious Metal Assets - Maintains slight overweight as safe assets remain preferred

Crypto Assets - U.S. Interest Rates and Sensitivity Expected, Investment Attractiveness Weakened With Safe Assets. Maintains Conservative Stance