Everyone’s expecting the Fed to cut rates in September, but Lark Davis asks - what if they don’t? He plays devil’s advocate and explains why it’s worth considering the downside.
Key points:
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Powell left the door open for cuts, but his Jackson Hole speech was cautious - inflation is closer to target, but not low enough yet
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Inflation data is mixed: CPI steady at 2.7%, but PPI jumped, which could push prices higher in the coming months
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Job growth is slowing, yet unemployment is still low and wages are rising - giving the Fed room to hold rates if they want
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Some Fed officials are openly doubtful about cutting in September, saying inflation is still closer to 3% than 2%
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Markets are pricing in an 86% chance of a cut, but if Powell surprises and holds, expect pain first - though Lark thinks any dip would be short-lived
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Longer term, he believes rate cuts are coming, especially if Trump replaces Powell in 2026 with someone more dovish
Bottom line: If the Fed cuts in September, risk assets (including crypto) get a boost. If not, brace for short-term pain but also potential buying opportunities before the next easing cycle kicks in.
