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Today is the day people have been waiting for over in what has been now two years, because this afternoon the Federal Reserve is set to announce its first rate cut of this new interest rate cutting cycle. A few months ago, Chairman Jerome Powell declared victory over inflation, even though higher prices are still hurting so many, and then election day got closer on the calendar and the July jobs numbers disappointed.

Traders have put in bets in the options markets for a continuation of the market rally, that began after the early August VIX spike, on hopes that the Federal Reserve will lower interest rates by 50 basis points instead of 25.

In fact they are putting on RECORD SIZE bets!

According to Marketwatch, “The price of a strategy that would pay off if stocks see a sharp swing in either direction on “Fed day” has risen to its highest level since the run-up to the central bank’s March 2023 meeting.”

They are playing options straddles.

On Sunday, the odds were 50/50 either way, but now Fed Fund futures are pricing in a 63% chance of a 50 point cut.

What happened?

A Fed speaker got on TV and said he wants a 50 point cut.

And I think more people realized there is an election coming in just a few weeks.

There is a risk that if they cut 25 point the markets will dip for a few days and no one wants a market dip right now.

Not before the election.

But, why can’t the Fed just cut by 25 and simply say everything is incredible?

Look, outside short-term daily gyrations, there may not be another big drop until after the November election or New Years!

Gold made a new all-time high last week.

Silver and mining stocks are soaring folks on weekly charts, it’s all happening, but all the gurus still talk about is Bitcoin so the masses have no idea what is going on with precious metals.

We’ll see what happens today.

I really don’t care if the Fed cuts by a quarter point or a half point, because I’m not day trading or trying to play in short-term bets on these markets.

What I will be watching, though, is how the long-term Treasury bonds react.

Will they rally more on the Fed news today or finally sell Fed news?

They probably won’t sell Fed decisions yet, but if they do I’ll start to pay attention!

A day will come in the future in which bond traders worry about the growing government debt, just as a day will come when the final inning of this cyclical bull market in the stock market that began in late 2022 comes to an end, but neither of those days is probably today.

No “AI” was used to write this email or edit it.

In an internet where so much is phony and fake, as of today, 9,738 real people subscribe to this email newsletter. If you have been following the emails you may notice a drop in this number. Bitcoin believers, and they make up a good bulk of newbie traders, have been unsubscribing over the past few weeks. I have been getting a lot of angry emails from them. A Bitcoin guru has been lashing out at me, but I don’t care and I will not stop standing up against crypto gurus, because all they do is put out false claims and meaningless predictions that are only hurting people, making them miss out on better things they could be in.

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And…..

The price of palladium went up again, after breaking out last week.

PALL is an ETF that holds palladium and it closed right on its upper 200-day Bollinger Bands yesterday. I talked about a giant short position on palladium in the futures market setup for an eventual short squeeze months ago. Now it may be finally happening.

Palladium mining stocks are going up even more, and Power Investor members know the ones I am talking about.

Prediction: the price of palladium will go up more over the next twelve months than Bitcoin will.

That’s an easy prediction to make too, because palladium has a relationship to the bullish precious metals market and Bitcoin has been underperforming the price of gold, and the stock market, ever since its ETF launch earlier this year.

-Mike

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