As many expected, the Fed just cut rates by another 25 basis points, bringing down its overnight lending rate (mostly on consumer loans) to a range of 3.75% to 4%.

While I’m glad the central bank came through for everyone who hoped it would, I’m here to remind you that the real move isn’t going to be instant. 

It will come in the days ahead.

The truth is, rate cuts aren’t magic. They don’t automatically send markets soaring. 

What they actually do is change the tempo of the markets, and right now, Jerome Powell & Co. just dropped that tempo only a little.

So the question is this: Who’s been riding the wave of easy liquidity, and who needs it to survive?

Because I’ll tell you something Wall Street doesn’t always admit: A rate cut this late in the game means someone, somewhere, is bleeding harder than the headlines show — and the cracks are about to widen. 

Now pair that with Nvidia just crossing the $5 trillion mark.

That’s right, the company that makes chips for the AI arms race just hit an unheard-of valuation — bigger than Amazon and bigger than Google. 

Only Apple and Microsoft are even in the same ZIP code.

So, you’ve got one corner of the market inflating like a helium balloon and another limping into this rate cut hoping the Fed keeps throwing lifelines.

This is the exact kind of time traders really need to have their act together. 

Keep these important things in mind between now and year-end.  

What’s Up Next 

One important thing: The rate cut was priced in, but what wasn’t? 

I’ll tell you what — the tone, the projection, and the dots.

In his remarks after the FOMC meeting yesterday, Chair Powell cited the uncertainty caused by a lack of economic data during the government shutdown. 

He also noted how inflation has tipped to the upside this year while employment has tipped to the downside. 

Because of all that, the Fed is digging in on its dual mandate to help keep inflation manageable and employment healthy. 

“With today’s decision, we remain well-positioned to respond in a timely way to potential economic developments,” Powell told the audience. 

He also made a point of saying that FOMC members “differed strongly” on “how to proceed in December,” the last meeting of the year. (Yesterday’s decision was 10-2.) 

Then he really doubled down:

“A further reduction in the policy rate is not a foregone conclusion — far from it. Policy is not on a pre-set course.” 

In other words, Powell, whose term ends in May, isn’t about to cede much ground to the White House. Rate cuts aren’t guaranteed. 

Period.

All the variables the Fed has been watching will continue being watched. Any others that crop up will be monitored closely too. 

Another important thing: If inflation accelerates or the labor market really starts struggling, that will be your cue to look for ways to short frothy names or buy downside protection.

These are particular sectors to keep an eye on as things develop:

• Regional banks – If rates fall but lending doesn’t rebound, it could signal bigger credit risks.
• Semis outside Nvidia – AMD, Broadcom, and others have ridden Nvidia’s coattails, but if the AI tide slows, they’ll be the first to leak.
• Utilities & REITs – These are rate-sensitive sectors that benefit from cheaper borrowing. They could get a short-term pop.

Now, Big Tech Earnings

One more important thing: Amazon, Apple, Google, and Meta all have run hard this year, largely off AI hype and lower-rate optimism.

But now they’ve got to prove it. Growth has to justify the price tags.

Any whiff of weaker guidance or missed margins and these names could pull back fast.

Just look at what happened the last time Meta guided soft in 2022. It dropped more than $200 billion in about a day.

While everyone may be high on “AI to the moon” — and Powell just handed out another cup of punch — that’s not a reason to chase. It’s a reason to sharpen your pencil.

You want to be tactical, not hopeful.

This is where the smart money gets positioned before earnings start shaking the tree.

I’m watching:

1. Whatever comes next from the Fed, and 
2. Whether tech keeps absorbing inflows, or if we start to see rotation into the laggards (value, small-cap, energy).

Above all, my goal is to stay nimble. 

You can’t slack off when massive dynamics are shifting like this. 

Stay street smart,
Jeff Zananiri

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*Past performance does not indicate future results. Not typical