ONE Stock that will benefit from Rate Cuts

This week, the Fed is expected to cut rates. But as any FOMC, nothing is certain until it happens. In this newsletter, I will go through the possible scenarios and what are the likely impact! Including ONE stock that I think will do really well. Let’s go 😃 

What can POSSIBLY happen?

The Fed Funds rate is currently at 5.25%-5.50%. And the odds are 50/50 between a 25bps and 50bps cut.

If they were to cut 25bps, there is a risk that Fed is cutting too slow to stop a potential larger economy slowdown which might lead to a recession.

If they were to cut 50bps, they are sending the wrong signal to the market. The market may think that something is horribly wrong hence the aggressive cut.

While it seems like there is no good outcome here, a rate cut is still welcomed by the masses. Since Fed Chair Jerome Powell already set the rate cut in motion, he must continue with it in order not to disappoint.

The MORE important question is “How low should the Fed lower the eventual rates and how fast?”

Some analysts are forecasting a total rate cut of 1% by early next year, with 25 basis point reductions in September, November, December, and January. Others expect this full percentage point cut to happen by year-end, likely involving two 25 basis point cuts and a 50 basis point cut in the remaining three FOMC meetings.

There are also those predicting that rates may drop to as low as 3.5%, implying nearly two full percentage points of cuts before the Fed will stop.

However, it is important to remember that Q4 is generally a strong for stock market and I think it will be similar this year.

What WILL LIKELY happen?

I always refer to DATA. Based on past rate cuts, it seems like 25bps cut will be the BEST case scenario while a 50bps cut looks negative for stock market.

Barring any unexpected event, I believe the first cut will be 25bps to meet expectations and not rock the boat too much. However, I believe larger cuts could come later.

What should INVESTORS do?

Firstly, I am refinancing my mortgage loan to take advantage of the lower rates.

• For those who believe in larger rate cuts in 2025, you would prefer floating rates to take ride the interest rate down.

• For those who believe the larger rate cuts will come after 2025, you can lock in the fixed rates for a peace of mind (just in case, Fed decide to raise rates again), and currently fixed rates are lower than floating rates.

But I am no expert in Mortgage, so I rely on Ethan from Unbeatable Mortgage who manages all my loans.

Ethan and his team provides the best mortgage advice I know. Their creative solution and attention to details have helped me reduce my mortgage by more than $900! That is $900 more for my investments! And I am looking to reduce it further this time!

They also have a special offer for the InvestwithPete community! They will provide a FREE LOOK at your mortgage and help you to optimise it. If your mortgage can do better, they will tell you. If you are better off staying put, they will tell you too! No strings attached.

So if you want to lower your mortgage and get the best rates out there, you can fill a form below and Unbeatable Mortgage will get in touch!

Stock Market

Second, I am looking at investing in Banks!

Yes, this is a non-conventional bet but I am a non-conventional investor. In short, with lower interest rates, the banks can charge you a higher spread and lower rates also bring more loans and business activities!

Last night, I sent out my top 15 stock ideas to my Stock Market Genius community.

One of them is JPM.

It is one of the most well-run banks with the highest market share in the US, and a huge presence globally.

The current price is at a nice EMA support and the valuation is reasonable.

I did a synthetic trade on it which involves the following:

Sell Put at 205 strike and Buy Call at 210 strike, expiring Dec 20 2024

In 1 day, the trade is already up by $1648! and the trade only cost $9 👍️ 

Now I must emphasize that I don’t expect all the trades to work out so good so fast. But the important thing as a investor/trader is knowing when to let your profits grow and cut your losses fast.

Whether you are trader or investor, if you like to also learn how to invest profitably and with confidence, join more than 250 investors in the Stock Market Genius community and lets prosper together!

Alright! This should get you ready for the markets this week!

May Your Profits Grow!

Pete
Invest with Pete

🚨‼️ By the way, I’ll never PM anyone on telegram or any other social media platforms. If you receive any “Pete” messaging you, these are scammers impersonating me. Pls beware!

The information provided in this newsletter is for informational purposes only and does not constitute financial advice. Readers should seek their own independent financial advice before making any investment decisions. Please note that while Pete is a portfolio manager, the opinions expressed in this newsletter are his own and do not represent the views of any organization. Always perform your own research and due diligence before investing.

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