Editor’s Note: For weeks, the Federal Reserve’s September meeting has been the talk of the financial world.
Right now, markets are pricing in more than a 90% chance that Fed Chairman Jerome Powell will announce the first interest rate cut of 2025 this coming Wednesday.
This could trigger shockwaves across the market, and our colleagues at Monument Traders Alliance will be getting investors prepared for what they believe could be a “dream scenario” of buy opportunities.
Click here to learn about their upcoming FREE “Trump vs. Powell FOMC Watch Party” event.
– James Ogletree, Senior Managing Editor
We’re less than 2 weeks away from what I believe is the biggest FOMC event in decades.
I’ve been talking about it for the last few weeks, and for good reason.
The amount at stake is incredible, and I know that sounds like a bold statement.
But in all my years of trading, I’ve never seen a scenario quite like this.
The tensions between President Donald Trump and Fed Reserve Chairman Jerome Powell are about to boil over… and I believe an aftershock could be in play.
Here are 3 different scenarios I could see playing out…
FOMC Scenario 1: Powell Kisses Trump’s Ring and Markets Move Up
In this scenario, Powell does exactly what Trump has been wanting him to do.
Powell delivers the news that the Federal Reserve is cutting interest rates by 25 bps, bringing the target range to 4-4.25%.
But Powell doesn’t stop there… he takes it a step further.
He goes as far as to say that this is the start of a well-calibrated easing cycle. Meaning multiple rate cuts are on the horizon.
Trump is giddy with enthusiasm. He takes to Truth Social and announces “this is the start of America’s next big economic boom.”
The market reacts to the upside.
Sectors like tech, real estate, consumer, and utilities spike.
Lower borrowing costs also light up growth expectations.
Overall, it sends a signal that yes, this is the start of an easing cycle and not a recession panic.
FOMC Scenario 2: Powell Tells Trump to “Shove it” and Markets Sell Off
Instead of playing nice like the first scenario, Powell hits Trump with a haymaker of his own.
He knows Trump is going to fire him anyway. So why not go out like a gangster and tell Trump “no rate cuts for you” before sailing off into the sunset?
In this case, Powell says he’s not cutting rates, citing that inflation isn’t under control.
Investors feel blindsided. All that talk of an almost certain rate cut and a soft landing is dashed.
Because of this unexpected move, equities react to the downside.
Tech and real estate stocks get hammered fast. Traders dump growth stocks, and long-term yields spike higher as recession fears kick in.
Powell walks out of the burning building without bothering to look at the destruction.
FOMC Scenario 3: Powell Walks the Tightrope and Markets Fluctuate
In this last scenario, Powell doesn’t cave to Trump or get overly hawkish. Instead, he meets Trump halfway.
He announces rate cuts of 25 bps, agreeing that the recent low jobs data is a viable reason for the decision. But he stops short of saying “this is the start of an easing cycle with multiple rate cuts.”
Powell’s tone will be key here.
How cautious does he sound? Is he being too ambiguous?
If he is, stocks might cheer the move in the short run. But growth-heavy sectors like tech and real estate could see wild swings over the long term amid the uncertainty.
Why It Matters for You
Look, while it’s fun to try and predict what will happen during the FOMC meeting, the truth is your money is too valuable to get caught in the wash of all this political drama.
Forget about whose side you’re on for a second…
The stock market HATES uncertainty, and when there’s an all-out verbal civil war happening with President Trump and the active Fed Chair – the probability of a severe aftershock is in play.
So far, we haven’t seen much of a market reaction to this upcoming event. But that could change instantly depending on what happens Sept. 17.
But the beauty is that if I’m wrong and there’s no major reaction, I’ll have research that aims to make you money no matter what.
I’ll be going over more details below on how you can get prepared.
YOUR ACTION PLAN
No matter what happens on Sept. 17, we’ll be ready to help you navigate the aftershock. Next Wednesday, my partner Karim Rahemtulla and I are going live at 1:15 p.m. for our “Trump vs. Powell FOMC Watch Party.”
We’ll talk about the effects the FOMC announcement will have on your money in the weeks and months to come. We’ll also show you how this announcement could set up a “dream scenario” for traders like you.
The event is completely free.