"Market Warning: Fed Rate Cuts and the Impending Recession"

Market-based expectations for the Federal Reserve to cut its key lending rate by around 1.5 percentage points in 2024 have led equity bulls to anticipate a soft landing for the economy, but historical data suggests that such significant rate cuts have typically been associated with recessions rather than a soft landing. While investors have priced in a Fed policy pivot to lower interest rates, the historic precedent leans towards the likelihood of a recession, making the hurdle to achieve 150 basis points of cuts over 12 months high if a recession does not materialize.