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EndGame Macro
25 Keeps the Narrative Intact And 50 Breaks It Wide Open
My base case is still a 25 bp cut today. Not because everything is fine, but because the Fed knows how much the size of a move shapes the story. A quarter point cut says, “We’re easing because the cycle is slowing, and we’re doing it on our terms.” It keeps the tone calm and intentional which is exactly what they want heading into a fragile part of the year.
A 50 bp cut lands completely differently. Anytime the Fed has gone that big like in 2001, late 2007 and after major shocks in the late ’80s and early ’90s the market’s reaction has followed the same arc. At first, there’s relief with cheaper money, quicker easing, a little bounce in risk. But that doesn’t last, because people immediately start asking why the Fed felt the need to move that aggressively. And once that question hangs in the air, the psychology shifts. Big cuts rarely read as confidence; they read as concern. They tell the market that something underneath is weakening faster than we thought.
That’s why I don’t think Powell touches 50 today. A move that size would overpower whatever message he tries to deliver at the podium. Instead of steady, planned easing, the headline becomes “why did they panic?” And once markets start trading that narrative, you can’t reel it back in with a press conference.
So 25 isn’t just a policy choice, it’s the cleanest way for them to preserve the illusion of control.
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25 Keeps the Narrative Intact And 50 Breaks It Wide Open
My base case is still a 25 bp cut today. Not because everything is fine, but because the Fed knows how much the size of a move shapes the story. A quarter point cut says, “We’re easing because the cycle is slowing, and we’re doing it on our terms.” It keeps the tone calm and intentional which is exactly what they want heading into a fragile part of the year.
A 50 bp cut lands completely differently. Anytime the Fed has gone that big like in 2001, late 2007 and after major shocks in the late ’80s and early ’90s the market’s reaction has followed the same arc. At first, there’s relief with cheaper money, quicker easing, a little bounce in risk. But that doesn’t last, because people immediately start asking why the Fed felt the need to move that aggressively. And once that question hangs in the air, the psychology shifts. Big cuts rarely read as confidence; they read as concern. They tell the market that something underneath is weakening faster than we thought.
That’s why I don’t think Powell touches 50 today. A move that size would overpower whatever message he tries to deliver at the podium. Instead of steady, planned easing, the headline becomes “why did they panic?” And once markets start trading that narrative, you can’t reel it back in with a press conference.
So 25 isn’t just a policy choice, it’s the cleanest way for them to preserve the illusion of control.
WATCH LIVE TODAY: Press conference with #FOMC Chair Powell at 2:30 p.m. ET: https://t.co/1uJrua5Yif
https://t.co/FJa6TblbC1 https://t.co/4KvqVjHSM1 tweet
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WealthyReadings
Both $SE and $MELI keep falling. Both trade below my assumed fair value. Both can go much lower.
In both case, their e-com are under pressure. Competition is pushing them to defend market share and that often means sacrificing margins short term to onboard and retain customers. Protect their market shares.
None of this is new. It has happened before, it is common in this sector, and it is not going away anytime soon.
The challenge is that we may be entering a softer period. When that happens, the market doesn't maintain high premiums because those premiums are tied to expectations of future cash generation.
A margin squeeze creates uncertainty around those future cash flows.
Will they come out of this stronger? Will they regain margins? Will cash generation recover? Or is this the start of something more structural in part of their business?
That’s what the market is pricing in today. Until it gets clarity - and that could take several quarters, multiples are unlikely to return to their highs and will probably drift toward their lows - or stabilize.
At that point, either the stocks will get too cheap to ignore - like what we are seeing with some sectors today, or margins will rebound because at the end of the day, both companies are world-class and not easily knocked off.
I’m not worried about the businesses long term. But in the short to medium term, I am cautious on the stocks. So for now, I’m staying patient.
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Both $SE and $MELI keep falling. Both trade below my assumed fair value. Both can go much lower.
In both case, their e-com are under pressure. Competition is pushing them to defend market share and that often means sacrificing margins short term to onboard and retain customers. Protect their market shares.
None of this is new. It has happened before, it is common in this sector, and it is not going away anytime soon.
The challenge is that we may be entering a softer period. When that happens, the market doesn't maintain high premiums because those premiums are tied to expectations of future cash generation.
A margin squeeze creates uncertainty around those future cash flows.
Will they come out of this stronger? Will they regain margins? Will cash generation recover? Or is this the start of something more structural in part of their business?
That’s what the market is pricing in today. Until it gets clarity - and that could take several quarters, multiples are unlikely to return to their highs and will probably drift toward their lows - or stabilize.
At that point, either the stocks will get too cheap to ignore - like what we are seeing with some sectors today, or margins will rebound because at the end of the day, both companies are world-class and not easily knocked off.
I’m not worried about the businesses long term. But in the short to medium term, I am cautious on the stocks. So for now, I’m staying patient.
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memenodes
Jerome Powell after realizing he’s more powerful than the U.S. president right now https://t.co/qpszKwxqmM
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Jerome Powell after realizing he’s more powerful than the U.S. president right now https://t.co/qpszKwxqmM
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Quiver Quantitative
There are reports that the GOP intentionally goaded Jasmine Crockett into running for Senate in Texas.
Speaker Mike Johnson just gave this reaction to her decision: https://t.co/0DY5YdE2xB
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There are reports that the GOP intentionally goaded Jasmine Crockett into running for Senate in Texas.
Speaker Mike Johnson just gave this reaction to her decision: https://t.co/0DY5YdE2xB
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Offshore
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WealthyReadings
$HIMS continues to expand and to execute.
Yet, the market continues to ignore the stock, as expected.
Why? Because the market doesn't care about "maybes" or god given missions. It cares about cash.
"But the market doesn’t care about this. It cares about data and narratives. Right now, both are shifting negatively & I personally do not see any reasons to stay invested in Hims as they might succeed, but it will take time without any guarantee.
Better to sit out from here. Let others take the risks, let the market adjust. Observe. And I will gladly buy back in if valuation allows me, if we have more clarity on the short & medium term and if Hims shows early signs of success. Until then, I’ll continue to comment. But I won’t be involved."
This is what I shared back in October when I sold my shares above $60. So far, I see no reasons to be involved again.
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$HIMS continues to expand and to execute.
Yet, the market continues to ignore the stock, as expected.
Why? Because the market doesn't care about "maybes" or god given missions. It cares about cash.
"But the market doesn’t care about this. It cares about data and narratives. Right now, both are shifting negatively & I personally do not see any reasons to stay invested in Hims as they might succeed, but it will take time without any guarantee.
Better to sit out from here. Let others take the risks, let the market adjust. Observe. And I will gladly buy back in if valuation allows me, if we have more clarity on the short & medium term and if Hims shows early signs of success. Until then, I’ll continue to comment. But I won’t be involved."
This is what I shared back in October when I sold my shares above $60. So far, I see no reasons to be involved again.
I decided to close my $HIMS position today, after last night's earnings.
If you are interested by a clear & unbiased summary of the earnings, why I am closing my position & why I believe $HIMS will go through some tough times, it's all detailed below.
https://t.co/vTcjV48al4 tweet