This is the strangest Fed Meeting in a long time according to the WSJ’s Nick Timiraos. Trump failed in his bid to remove Lisa Cook from the meeting as an appeals court ruled 2-1 Monday night that she could attend. At the same time the court ruling came in, Trump’s head of The Council of Economic Advisors Stephen Miran was confirmed and will be at the meeting sitting in the same corner of the Fed’s conference room table as Cook with only one governor between them.

More to the point, investors will be closely focused on if Powell furthers his pivot toward cutting rates that he began in his speech at Jackson Hole last month. Everybody knows the Fed will cut 1/4 point, but the question is whether they will follow it up with two more cuts in October and December or just one.

To get a gauge on this, investors will focus on the Dot Plot in which Fed Governors specify what they expect rates to be at the end of the year. Will it be 3.75%-4.00%, implying just one more cut? Or will it be 3.50-3.75%, implying two more cuts? (“What To Watch At The Strangest Fed Meeting In Years” [SUBSCRIPTON REQUIRED], Nick Timiraos, WSJ Sept 16).

According to JP Morgan’s much watched game plan for Fed Day, there is a 47.5% chance of a “Dovish Cut” in which the Dot Plot shows another two cuts for the rest of 2025. If so, the market is likely to like and send stocks higher by 0.5%-1.0%. On the other hand, there is a 40% chance of a “Hawkish Cut” in which the Dot Plot shows just one more cut in the next two meetings. If so, the market is likely NOT to like it, sending down between 0.0% and 0.5%.

Another factor to consider is that the market is coming into the Fed Meeting overbought.
 

Finally, BeSpoke has a great chart they put out every Fed Day showing the typical reaction during Powell’s tenure. The above is the most recent I could find on Twitter which came out before the June 18 meeting. As you can see, the market tends to rally initially while selling off into the close.

More By This Author:

Investing In Stocks Outside The Circle Of Competence
Wild Days: ORCL +$200 Billion, 911,000 Disappearing Jobs, Thin Leadership = 9th Inning
Is This The Top? Reflections On Cycles And Macro