This Fed rate cut is likely just a brief calm before the storm.

Everyone is watching the rate cut decision at 3:00 AM on Thursday, but the real game-changer might be half an hour later—the highlight is Powell’s speech at 3:30. Keep in mind, he previously made it clear that he was "not inclined to cut rates," so this move seems more like a compromise under pressure. So don’t expect him to sound dovish; he’ll probably use tough language to cool the markets and pave the way for a “pause in rate cuts.”

The issue is, with rates down to 3.5%, we’re back in the neutral zone, which isn’t high by historical standards. But inflation is still stubbornly stuck at 3%, quite a ways from the Fed’s 2% target. The economic data hasn’t collapsed either—it’s been surprisingly resilient. By this logic, the Fed really has no reason to keep easing—that’s exactly what Powell has been repeating.

My take? After the rate cut news is out, the market is likely to take a sharp downturn. Now is a good time to build short positions on the highs (the kind with 2x leverage for long-term holds), and with the current bear market sentiment, the odds aren’t bad. Of course, those who prefer to play it safe can stay on the sidelines and wait to buy the dip after a real tumble next year.

The turnaround should come in the second half of next year. Once the Trump administration takes over, they’re expected to push for aggressive rate cuts, liquidity will flood back, and the market will begin a new upward cycle.

The next six months will be tough, but this isn’t the end of the bull market—it’s just a halftime break. Stay alert, and don’t fall behind in the darkness before dawn.