September 2024 Insights - The Fed Cuts Rates by 50 BPS

Insights: September Insights

It has finally happened, the Fed cut rates 50 basis points, and many speculate that there will be another 50 basis point cut by year’s end, with the potential of 100 basis point cuts combined in 2025. The chatter pre-cut was if Jerome Powell would stick to a 2% inflation target before cutting rates, or if he’d potentially risk credibility and cut sooner. Others felt a cut would happen prior to the election. With August 2024 inflation at 2.5%, I think it is fair to say the path was rather middle ground and timed before the election as was speculated. For context, the last Fed rate cut was on March 16, 2020, as an emergency measure due to COVID. The Fed began hiking rates in March of 2022 in response to the highest inflation figures in 40 years. With this policy shift, rebalancing will once again occur to optimize portfolio performance. 

Regarding investments, this is nothing new, diversification matters right now as it always does, but perhaps with emphasis. Though I do not hold heavy concentrated positions for clients, if by chance you have outside concentrated positions in any one thing, assessing an opportunity for diversification would be wise. As rates continue to fall, we can expect a weaker US dollar and the strengthening of gold. I am personally glad to see the rate cuts as it inflicted pain on small business, regional banks, and those who couldn’t make a home move or other big purchase due to rates. Perhaps it is finally time to exhale and look forward with cautious optimism. There is still an election ahead which usually means some amount of volatility. 

Separately, I’d like to encourage all of you to assess cyber security. The number of hacker attacks has steadily risen. With the current state of digital reliance, it is important to take prudent measures to ensure your personal information is handled with care securely. I will be releasing an idea piece with suggestions on what to consider to do a security check. I’m happy to talk with each of you about ideas on how to build strong digital walls for your protection. 

A couple announcements… One is that I will be conducting a series of financial seminars at the Wilkinson Library in Telluride, each are from 5:30-6:45pm. Here’s the lineup with more to come in 2025: October 3 Women & Wealth, November 7 Philanthropic Giving & Tax Loss Harvesting, and December 5 Financial Planning Going into 2025. Lastly, I have joined the San Miguel County Historical Commission. In finance, we disclose any outside interests and thought I’d mention this before all documents are updated. I am really thrilled to be working with the team in place to keep this area that I’ve been coming to since I was very little pristine with historic buildings intact. I wanted to contribute to the local community and this I feel is a perfect fit. I am a particular fan of Lewis Mill – many hikes up there this summer. 

I wish all of you a lovely Fall! Who is ready to ski soon?

All the very best,

Leise

President, Lion’s Eye Wealth