November Fed Preview: Policy Action Conditional To Politics And Geopolitics
- The Fed is expected to cut by 25bpt on November 7th, but the actual policy action could depend on the unfolding political and geopolitical situation.
- The Fed could be forced to cut more aggressively in case of the flight to safety or even consider hiking due to the geopolitically induced energy shock.
- The S&P 500 could be facing a deep 20% drawdown, but also a V-shaped recovery as the VIX peaks.
- However, if the unfolding situation causes a recession, like in 1974, the S&P 500 could be facing a 50%+ extended bear market.
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The FOMC November meeting
The FOMC is set to meet on Thursday, November 7th, and the market consensus is that the Fed will cut by 25bpt, which is confirmed by the odds implied from the Federal Funds futures. There is
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