00:00Getting back now to those rate cuts,
00:03I found this slide from Charlie Bielo's,
00:06a great follow-on.
00:10He put this together.
00:12I thought this was really interesting
00:14because a lot of people were saying,
00:15oh, we're gonna get 50.
00:16And I know with some of the latest news,
00:19we're at about an 85% probability of 25
00:23and only 15 of 50,
00:25but that looks to be actually a good thing.
00:28And he put these stats together
00:30and I found this really interesting.
00:32The first Fed rate cut after a hiking cycle,
00:36when we've gone 25 and when we've gone 50
00:40and the S&P forward returns going out one year,
00:44two years, three years, four years beyond that.
00:47And you can see that the couple of times
00:49that we had our first cut be 50 basis points
00:54was 01 and 07.
00:57And we see the subsequent returns
00:59over the next couple of years
01:00and they were not favorable.
01:03So we actually probably should be hoping
01:06and look to be getting that 25 basis point cut
01:09because that's actually much more favorable
01:11for the market going.
01:13And this is such a good point
01:14because the 50s are normally used
01:18for when the economy is really in a lot of trouble.
01:212001, the tech bubble burst.
01:242007, the financial crisis.
01:27They usually only use 50s
01:30when we're in a whole lot of trouble.
01:32So where markets are near all time highs,
01:35why the hell do we need a 50?
01:37And to that point, Dennis,
01:39that's what I was saying on that previous slide.
01:41What is the market going to be telling us
01:44for us to need 250 basis points worth of cuts
01:47in the next 12 months?
01:49To me, that signals a market in an economy
01:52that's not on strong footing.
01:55If we see that level of cutting over the next 12 months,
01:59I feel that that signals a weakening economy
02:03and not something we want to see for the stock market
02:05over the next 18 to 24 months.
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