Whenever I see prices tumbling these days, two suspects come to mind: Donald Trump or the Fed.
And lately, that’s been a pretty safe bet.
Eight times out of ten, one of them has something to do with it.
This time, it’s the Fed
As expected, the FOMC decided on another rate cut for the US central bank, from 4.25% to 4%.
But Jerome Powell, the chair, didn’t stop there...
He said this could be the last cut of the year. Initially, further adjustments had been expected through December.
The Fed is trying to strike a balance between inflation that’s still too high and a jobs market that’s starting to slow.
The problem is that its tools pull in opposite directions: cutting rates supports employment, while raising them helps curb inflation.
Coincidence or not, the Fed’s decision comes just as several major US companies, including Amazon, have announced thousands of job cuts.
Which brings us to the next topic.
Polymarket
For a while now, I’ve been seeing Polymarket mentioned on finance forums and X without really knowing what it was.
After three weeks of procrastination, I decided enough was enough. Time to satisfy my curiosity.
It turns out Polymarket is a betting platform with a rather interesting concept: users bet on the probability of political, economic and social events happening.
I’m not here to promote it. What interests me is that the odds often reflect market sentiment.
For example, you can bet on how many basis points (bps) the Fed might cut in December.
I don’t know how long that market has been open. But after the recent announcements, it seems likely there won’t be another cut.
My point is that I plan to keep an eye on the platform, not to bet, but to watch the trends.
I won’t treat the percentages as absolute truth. They can still provide an extra indicator to help refine a macro analysis.
And sometimes, a site like this shows just how wrong an entire market can be.
Imagine Polymarket in Michael Burry’s day, the man from The Big Short who saw the 2008 crisis coming.
Needless to say, the site is banned in France.