I rarely reach out here, but with such an exciting event as Donald Trump's victory in the presidential elections in the USA, one cannot miss such an opportunity to publish an important article.
Just like everyone started publishing their opinions here based on emotions and euphoria. Trump won, and that’s it, definitely to the moon. Not so fast.
In the flood of information and euphoria, everyone forgets one important thing, what do all markets grow on? Exactly, on cheap money. It all depends on what influence Trump will have on the Fed. And what they will agree on. I suppose that a real start of the alt season can be expected no earlier than autumn 2025.
Why is that? It's simple, if the Fed reduces the rate by 0.25-0.50 basis points at each meeting, then the rate will be close to zero in 8-12 months, starting from September 2024. But it’s important to consider another factor. The Fed can change its stance at any moment and lower the rate more aggressively, for example, by 0.75-1.0% at each meeting, then plans and expectations should be adjusted.
And lastly, once again, any market grows on stimulation and cheap money. On positivity in the world and on expectations of a bright future. And when negativity reigns in the world, money is expensive, and uncertainty prevails. There’s nowhere for markets to grow from. It’s also illogical. So we wait, observe, and keep our heads.