SPCX 20261020

The Markets: Not to be Funny but Many are Confused

by with No Comment AssetsBehavioral SentimentBusinessCentral BanksEconomyEquitiesExclusive ContentFeatured HighlightsFinancial InstitutionsForexInvestingRisk ManagementRobert PetrucciSpeculatorsUncategorized

Mid-Term Ambivalence Reigns as Major Risk Events Unfold and Await for All Traders

In an effort to lighten the mood of the room let me assure you that most financial analysts feel they are in the dark. Talks with a wide range of investors and large speculators nowadays (at least within my circles) leads to the conclusion that a lack of clarity is becoming a known landscape. 

The Federal Reserve will hold conduct its FOMC meetings and rate decision next week. The price of WTI Crude Oil is raging near high water marks. SpaceX is traversing its initial IPO values again. There are major elections on the horizon in Brazil, Israel, the U.S and South Africa which will effect world views starting this weekend and into early November. Some parts of Europe are burning. And the Middle East conflict appears to be on pause, but folks are bracing for a resumption of military noise. 

SPCX 20261020

SpaceX (SPCX) Value Since IPO Chart as of 20th October 2026

Add to the above a U.S President who appears able to change his stance in a moment’s notice without showing any outward signs of remorse is also a feature – one that often leaves other leaders perplexed. Except, that the White House seems primed on trying to keep chaos from entering the economic picture by trying to talk the public (voters and the world) into a stated belief that all will be OK, it will be tremendous, magnificent, better than ever before………and Crude Oil will be valued below $65.00 a barrel when everything is figured out, the U.S economy will remain uniquely strong and Wall Street will be a lovefest. The White House is correct to take a positive approach, but others are free to doubt.

And therein lies the problems, when will all be paradise? Clarity over the mid-term is important for investors who crave the basic necessity of being able to have some type of predictive grasp for the coming six months. Where will interest rates be? What will the price of oil be doing? Will the Iranian situation be cleared up? Will Tesla’s flying roadsters crash back to earth or land right side up? (Tesla announces its 3rd quarter results when Wall Street closes tomorrow btw).

USD centric strength continues to fluster Forex positions. U.S Treasury yields have come off their highs but are still elevated. The hidden costs of infrastructure builds for data centers remains an open nasty secret as revenue concerns are discussed. The Nasdaq 100 lurks near record highs, but at the same time creates fear that not enough momentum is being shown upwards – possibly translating into massive losses to come via some technical mindsets. Some are openly predicting a Wall Street crash. We have seen this show before folks, but it is unclear what path is going to develop. The Cassandras’ of the world do get boring as they proclaim a known script.

Yet we stand at a precipice and better know how to scale the cliff. Inflation via Crude Oil prices that are currently gushing past $100.00 are problematic. But should Fed Chair Kevin Warsh raise interest rates next week to try and fight inflation being caused by a geo-political storm that he has no power over? Saudi Arabia, the Houthis, Iran, the UAE, Israel and many others are seemingly waiting for the mid-term elections in the U.S to take place if you pay attention to the media, but is that what really is going on? Doubtful. There are plans being made outside of our known scopes and we are not allowed to look beyond the curtain.

The Federal Reserve should not raise the Federal Funds Rate next week because of oil price fears and even if its inflation remains sticky for the time being. ‘Should not’ being the key words. The USD should return to a slightly weaker stance, but will this happen as financial institutions brace the potential of cumbersome near-term dramas over the next two weeks? Let’s point out that the price of WTI Crude Oil was slightly lower on the 16th of September, during the last FOMC meeting and decision.

No, I am sorry, I do not have a whirlwind of advice for speculators except to say be careful for the moment. As a trader I knew in the past once told me, reading today’s news means you are reacting to something someone knew a few days beforehand – there is a source, a discussion with a journalist, and then the writing and publication of the article roadmap which we must consider when trying to act on news we are reading for the first time. In other words, someone has already traded on the news you are consuming. 

Social media and influencers are terrific, but they tend to be a day late. Current trading dynamics offer a slightly different problem for the moment, because large institutional investors have likely positioned themselves ahead of the news flow that the public is consuming as they try to venture forth via their own predictions. However, because confusion reigns for the moment, there is a good chance the financial institutions are wrong. Meaning speculators should use their own perceptions and experience to judge the potential dangerous currents flowing. Hoping for the best will not be enough, being prepared for challenging circumstances near-term will help.

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30Y Treausry Yields 20260826

How Warsh Can Solve the US Debt Crisis With Just a Few Words at Jackson Hole!

by with No Comment AssetsBehavioral SentimentCentral BanksCharles NajjarCorporateEconomyEquitiesExclusive ContentFeatured HighlightsFinancial InstitutionsForexInvestingRisk ManagementUncategorized

A Roadmap for Fed Chairman Kevin Warsh to Rescue U.S Debt

Many think the market decides interest rates.

Wrong!

The Fed – and only the Fed – has full control over interest rates, all over the curve!

We just need to have the right person on board.

During the European crisis in 2011, speculators all around the world were betting that the Eurozone would explode and that the EUR would collapse under the weight of government debt that had started with Greece and spread to other countries that were shamelessly labelled “PIGS,” adding insult to the speculative attack.

Trichet, at that time chair of the ECB, seemed totally clueless, afraid to take any “unconventional” step, even at the risk of seeing the entire European financial system go bust.

The crisis seemed unstoppable… until Mario Draghi stepped in, replacing Trichet.

With just one magical statement (“the ECB will do whatever it takes to save the Euro. And believe me, it will be enough”) Draghi implied that he was ready to buy government bonds from European countries, even though such action was considered at the time to be “against the ECB’s statutes” and outside its mandate.

By going against the prevailing market narrative, and knowing very well the economic strength of the Eurozone, Draghi forced the market to follow him.

The speculation against the Eurozone stopped almost instantly, and European government bond prices recovered without the ECB even being forced to intervene!

30Y Treausry Yields 20260826

U.S 30-Year Treasury Yields Chart From 1988 until 26 August 2026

Today, the U.S is in exactly the same position!

A massive speculative attack is being waged against U.S debt (probably led in part by the crypto industry in an attempt to justify the “value” of its virtual tokens), with “inflation” suddenly becoming the ultimate beast.

Like Trichet at the time, the weak Powell got driven into the trap of raising rates abruptly on his own government, forcing it to pay more than $1 trillion in yearly interest, a massive and unnecessary injection of liquidity that is itself… inflationary!

In today’s world, driven by massive debt, raising interest rates on governments is INFLATIONARY!

Now that Powell is almost gone, all hopes lie on Warsh’s shoulders.

He can save the U.S from the current debt crisis with just a few words, exactly as Draghi did for Europe.

Warsh completely missed his first intervention a month ago. Instead of showing the market who’s boss, he showed total febrility.

Fearing being labelled a “Trump puppet,” he insisted on the 2% inflation target – an absurd threshold that nobody really knows where it came from – and claimed that “the economy is robust”… while we all know it is not!

Then he totally capitulated to the market by saying that he would “listen to the market” to determine where rates should go. The worst thing any Governor could ever say!

That’s how long-term yields exploded to levels not seen since 2007, and forcing Bessent to intervene to limit the damage.

We are now just one day away from the Jackson Hole Symposium.

Warsh can now either save the U.S or send it into Armageddon!

Every word he says could change the entire picture.

He simply has to focus on the right narrative:

  • Current inflation is geopolitical and driven by supply shocks. Raising interest rates has zero impact on such inflation.
  • The 2% inflation target is NOT an absolute figure. A 3% inflation rate should be acceptable when the economy is at risk.
  • Signs of recession are looming, with the labor market under pressure, rising bankruptcies, and record rates of defaults on credit cards and car loans.
  • Forcing the government to inject more than $1 trillion through interest payments is itself inflationary. Raising interest rates to fight inflation is counterproductive at such a high level of government debt.

If Warsh is capable of highlighting these arguments, yields will drop instantly without any intervention from Bessent.

Then the Fed can start decreasing interest rates gradually, with the market accepting whatever rate it sets.

What if Warsh deliberately gave a disastrous speech a month ago, taking a tough position against what Trump appointed him to do and allowing the market to drive rates to extreme levels… only to radically change his position following the recommendations of the task force he appointed?

This way, he would have absolved himself from being labelled Trump’s puppet while executing exactly the plan of reducing interest rates.

We can therefore suspect that he will take the opportunity at Jackson Hole to present the first findings of this task force, which could include, among other things:

  • A questioning of the 2% inflation threshold, especially when the economy is at risk of entering a deep recession.
  • Stressing that inflation comes mainly from geopolitical issues and supply shock. Fighting such inflation with high interest rates is totally inefficient.
  • A highlight of the absurdity of raising interest rates on the U.S government and forcing it to inject $1 trillion in interest payments – an unnecessary injection of liquidity that is itself inflationary.
  • The necessity of coordinating with the Treasury Department to fight inflation where it hurts the most, through subsidies, tax relief, and other targeted measures, while primarily fighting “greedflation” through higher profit taxes on specific industries.
  • A warning about the increasing risk of recession, with record numbers of corporate bankruptcies, credit-card defaults, and a deteriorating job market.

Warsh has a unique chance to prove that he is the right person for the job by rescuing the U.S from the massive speculation against its debt, exactly like “Super Mario” did when he saved Europe from collapse in 2012.

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USDJPY 20260813

Sentiment Matters: Speculative Narrative and the False Promise of Data

by with No Comment AssetsBehavioral SentimentCentral BanksCommoditiesCryptocurrenciesEconomyEquitiesExclusive ContentFeatured HighlightsFederal Reserve, Interest RatesFinancial InstitutionsForexInvestingRisk ManagementRobert PetrucciSpeculatorsUncategorized

Do Retail Traders Understand They Are Being Misled?

As day traders ponder what they should do next via their speculative wagers in the broad marketplace, now is a good time to remind small speculators stepping into the casino of global assets that a lot of the production value they are offered is part of a show. Entertainment is literally being produced to entice people to trade. A large amount of retail traders are constantly being misled. Your adrenaline high is being counted upon to keep you a participant. The thrill you get when you are trading should not be more important than the outcome of your trade.

Large money machines like the Nasdaq 100, S&P 500, U.S Treasury yields, Forex, commodities and even the cryptocurrencies have plenty of descriptive words and definitions trying to interpret and predict values, trends and outlook, but quite frankly a lot of the words are nonsense created to entice and fool. Making retail traders willing participants in the circus is important because it keeps a lot of the the entertainers employed. 

It should be remembered that a lot of the folks on the institutional side of financial markets do not care about day traders except as an example of what not to do. They use day traders as a touchstone to point to failures and convince you why you are out of your element, while hoping you will stick around to create volumes that are often needed in some speculative assets. Are you being taken advantage of as a small speculator? 

USDJPY 20260813

USD/JPY Long-Term Charts as of 13 August 2026

It is Much Better to be the Bank

A lot of people in the institutional financial industry know one thing for certain, while some make money investing by themselves or produce outstanding results for funds, many do not. There is an old saying among veterans in the arena, “it is much better to be the bank”. Transactional costs from commissions, carrying charges, exchange fees and taxes make money for the institutions and government regulators.

Many folks are involved in the financial markets because it provides a solid pay check, it remains a good career path for those who want the comforts of modern society. However, being a day trader while working another job as a blue collar employee, or business owner, or while being a professional in another endeavor and dreaming about wealth creation via speculation is alluring, but it frequently does not produce steady profits like it does for the people working in financial institutions collecting a paycheck. 

Confirmation Bias and Investment Outcomes

Economists for instance are relied upon to decipher inflation and decode data for devoted audiences. The believers are told why certain assets are reacting and what might happen in the future by the influencers. But this also can manifest into self-fulfilling prophesy that may not actually be connected to real economic outcomes, except that outlooks get fulfilled because of emerging behavioral sentiment.

For instance when yesterday’s U.S Core CPI was released and hit its expectation, what did markets do exactly, what were investors reacting to? The markets reacted to what the perception of mid-term outlooks will now do, based on how they think the Federal Reserve will act in September and the coming months. Reactions to anticipated results are a key factor in market dynamics. Large positions are shifted by financial institutions which have the ability to to absorb short and near-term losses of capital while they wait for their mid-term outlooks to be confirmed. Confirmation bias remains important in the marketplace as results get generated via intraday results as big players thrash violently with massive piles of cash causing technical perspectives to drive algo trading.

Inflation is Not a Joke

Btw, why did god create economists? To make weathermen look good. While that may fray the feelings of economists, the joke holds water. Because observable data and printed results often do not correlate. Just ask global consumers in various nations what they think about their government’s stated inflation data compared to what they are spending on a monthly basis and rising costs. People on the street often feel their national currencies feel like they are losing money no matter what central banks are proclaiming.

Inflation is an important measurement for consumers and investors. But real inflation is often not a desirable talking point for many governments. Often excluded data includes products like food, energy, and mandated medical and pension costs via payments to government social programs. Increasing rent or mortgages via rising interest rates inside of certain government inflation reports are frequently avoided too and would look atrocious. Central banks are supposed to fight inflation, but which inflation exactly? I am digressing I know, this may have nothing to do supposedly with everyday speculating in the marketplace, but actually it does.

Because the Forex market, gold, equity indices are reacting to sentiment generated by the second based on what outlooks will be in vogue in a few months and inflation effects. Our age of social media and fast communication makes the markets vulnerable to fear and optimism equally. Speed matters even if it sometimes causes pain for day traders via lightning quick results in the marketplace as outlooks change constantly.

Make no mistake, market forces are always in play as investors look for value. Sentiment caused by folks like central banks and their policies play consistently important and volatile roles as large players and financial institutions react to tea leaves being read. The USD/JPY is a case in point, the Japanese Yen has been dramatically weak and losing value long-term. 

The intervention by the BoJ and U.S Treasury which was coordinated a couple of weeks ago didn’t fix the problem that Japan has poor monetary and fiscal policy. What it did was serve as a warning to day traders and large players (including banks) not to bet too strongly against the JPY too consistently even if their perceptions tell them otherwise, because the Japanese and U.S government can wreck havoc and create unforgiving momentum which can kill the infectious trend upwards when they desire. 

The BoJ and U.S Treasury definitively put on a show for traders to watch and contemplate before they consider stepping into the casino again. Sometimes it is better to watch the entertainment instead of being an actor within the drama.

Thrill of Risks and Solid Tactical Strategy 

Why do speculators insists on chasing markets without having proper guidance? Why don’t these same smaller traders just let professionals manage their assets and put some money away when they can and accept the returns? Maybe because many speculators are skeptical about the real returns and know they are being made to endure a magic show of sorts. 

Day traders should only risk what they can afford to lose via a speculative allotment of cash. Fund managers for financial institutions, pension funds for example, are often mandated to put 2 to 3% of holdings into speculative assets in order to seek bolder returns. This is one of the reasons why hedge funds and speculative assets flourish in a cyclical manner. Large financial institutions allow for wagering on asset classes they know are dangerous in an extremely limited manner, but with a huge amount of money. Can you say Bitcoin? And it is widely accepted that these speculative positions can be wiped out and destroy capital. Institutions often do not mind losing on limited speculative positions, the same cannot be said for retail traders.

Smaller retail traders should not view themselves engaged in a battle against financial institutions which are filled to the rim with employees who are often unsympathetic about the outcomes produced. The world of speculative betting by retail traders is not about to change. Day traders should study momentum and behavioral sentiment.

Traders need to understand how to manage risks and emotions. While speculators can dream about making illustrious profits to impress friends and partners, if they do not take into the consideration the costs of the risks they are likely going to fall into a deep hole. Strategic tactics are necessary. Retail trading doesn’t have to be a game if it is conducted wisely.

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SpaceX 20260810

With SpaceX IPO, Elon Musk’s New Problem is the End of Easy Money

by with No Comment AssetsBehavioral SentimentCharles NajjarEconomyEquitiesExclusive ContentFeatured HighlightsFederal Reserve, Interest RatesUncategorized

Private Companies Can Raise Capital at Negotiated Valuations, Public Companies Have to Raise Capital at Market Valuations

For years, Elon Musk benefited from something most corporate leaders can only dream of: easy access to practically unlimited private funding at hefty valuations determined by himself. All he had to do was build the proper narrative and convince a few large investors that his own valuation was the right one.

The SpaceX IPO fundamentally changed the process. It doesn’t mean Musk can no longer raise money. Surely, he can. But what changes is the ease, flexibility, and discretion with which he can do so.

When SpaceX was private, raising billions of dollars was relatively straightforward. Musk could approach a small group of investors, give a valuation, issue new shares, and obtain fresh capital without having to expose every detail of the transaction. He didn’t even have to convince all of them. If only a few believed his narrative, the company could raise money at an enormous valuation even while showing continuously negative operating cash flow.

SpaceX 20260810

SpaceX (SPCX) Chart Since IPO as of 10 August 2026

That mechanism becomes much more difficult now that SPCX is publicly traded.

A public company has a market price every second of every trading day. Any new equity issuance is immediately visible. Investors know exactly how many shares are being created, at what price, and why the company needs the money. If the market suspects a company is raising capital because its existing operations cannot finance its ambitions, the stock can fall dramatically. And that creates a fundamental difference.

A private company can raise capital at a negotiated valuation. A public company has to raise capital at a market valuation.

The pressure on Musk is mounting. Every quarter he needs to deliver. Every quarter he needs to find a new narrative to prevent the stock price from collapsing.

Let’s imagine SpaceX needs $10 billion funding. When it was private, Musk could potentially raise the money from institutional investors at a valuation agreed upon with those investors. The transaction itself could even reinforce the perception that SpaceX is worth more.

As a public company, however, the calculation is completely different. If SpaceX is trading at a $1.5 trillion valuation and announces a $10 billion equity offering, investors immediately ask why the company needs the money, whether its cash flow is sufficient, and whether further dilution is coming. And if the stock falls 20% following the announcement, the company would have made its financing problem much worse than before.

This problem is particularly critical because SpaceX is a highly capital-intensive business. Its only profit comes from Starlink. But Starlink cannot finance all the other negative-cash-flow businesses by itself, mainly Starship launches and AI ambitions.

Starlink is the only cash-generating asset inside the group, and it cannot become the piggy bank for the entire group, including Tesla.

How can we forget that, earlier this year, SpaceX came to the rescue of Tesla by buying up all the unsold Cybertruck inventory, at hefty margins for Tesla, which then “beat expectations” thanks to the trick?

Would such a move be accepted by the market now that SpaceX is publicly traded?

When SpaceX was private, the boundaries between Musk’s various ventures were much less visible to the public markets. Capital could move through a relatively complicated ecosystem of private companies and investors.

Now that SPCX is public, the shareholders would question every move, knowing that they are not necessarily willing to see their company become a financing vehicle for every project associated with Elon Musk.

With the SpaceX IPO, Elon Musk played his last Ace card. Now he’s left with a handful of weak cards to try to win the game. He can still bluff that he’s got another Ace hidden in his sleeve, but it’s not clear the market will believe him this time.

Private markets gave Musk something extraordinarily valuable: financial flexibility. Public markets are now forcing him to operate without it.

But Elon Musk’s financing problems aren’t limited to the SpaceX IPO. Like any capital-intensive venture, he also has to contend with the Fed’s ill-considered policy of keeping interest rates high, supposedly to fight inflation that stems from supply shocks.

Because of the Fed, every additional percentage point of interest represents billions of dollars transferred from productive investment to debt servicing. Money that could finance AI chips, data centers, engineers, research laboratories, or new factories instead goes to creditors!

The Fed might believe it is fighting inflation, but it is in fact raising the cost of winning the AI race for companies like SpaceX. 

It’s surprising that Elon Musk isn’t openly denouncing the Fed’s absurdity of keeping interest rates high, when his own companies are among those suffering most from it.

SpaceX’s recent $25 billion bond offering is a perfect illustration. The company issued five tranches, including $3.5 billion of senior notes carrying a 6.65% coupon and maturing in 2056. If the Fed’s rate were closer to 2%, the company’s borrowing costs would be at least half their current level. This bond offering is costing SpaceX somewhere around $1.5 billion a year in interest expense, that could have been slashed by half had the Fed acted quickly in reducing interest rates.

And this is precisely where the Fed’s policy becomes relevant to Musk’s financing problem.

High interest rates make borrowing far more expensive for Musk. At the same time, restrictive monetary policy makes investors more demanding about equity valuations and makes long-duration growth stories more vulnerable to changes in discount rates. They also make car loans much more expensive for potential buyers, which significantly affects Tesla sales.

Musk therefore faces a particularly uncomfortable combination: Equity financing is more visible and potentially dilutive. Debt financing is expensive. Private financing is no longer available on the same scale.

The SpaceX IPO, on top of the Fed’s mistake of keeping interest rates high, is putting significant financial stress on the “richest man in the world” as he urgently needs to find new imaginative ways to fund his highly capital-intensive ventures.

And this is without even considering the probability of a 2008-like financial crash triggered by the bursting of the AI bubble. How would Elon Musk manage to sort himself out this time in case of such financial collapse?

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Alphabet 20260724

The Not So Coincidental World of Google and WTI Crude Oil

by with No Comment AssetsBehavioral SentimentBusinessCommoditiesEconomyEquitiesExclusive ContentFeatured HighlightsFederal Reserve, Interest RatesFinancial InstitutionsInvestingMajor Global Equity IndicesRisk ManagementRobert PetrucciSpeculatorsUncategorizedWorld

Energy and Commodities in a World Where Legacy and Infrastructure Collide

Google (Alphabet) finished yesterday’s trading near $ 317.69, as of this moment WTI Crude Oil is around $88.50. It might seem rather odd to pair the two into the same paragraph, but this is not a coincidence. Both are now relevant regarding energy costs for consumers and produce an abundance of legacy products the world over. And oddly enough their one year charts almost look as if they are dancing in step.

Google is facing headwinds in recent trading as questions surround its capability to produce revenues because of its push into Artificial Intelligence and always growing need for more data center power. AI which has been an abundant source of bullishness in the Nasdaq 100 and had a knock-on effect into the S&P 500 the past couple of years has become shadowed by concerns of turning into a commodity. 

Alphabet 20260724

Alphabet (Google) One Year Chart as of 24 July 2026

As competition in the AI sector increases this is creating pressure on prices in order to allure customers away from competing brands. China is also stepping into the world of Artificial Intelligence and it will certainly use its ability to produce less expensive products moving forward. Profit margins are being fought over by competing companies

Google is not a poor company, but there are growing doubts about its debt and revenue ratios. The costs to power its worldwide data ability for its users and its investment into AI via Gemini and its DeepMind technology does not have a particularly easy solution. Estimates from a variety of sources claim that Google has reduced its staff between 1,500 to 3,000 through employee reductions and reorganization, this as the company needs to pile more cash into infrastructure.

The onslaught of other companies able to produce AI which is seen as more robust and capable have also caused a marketing headache for Google, which has an effect on behavioral sentiment. GOOGL was trading at apex levels only two months ago when it was traversing above the $400.00 mark. The downturn thus far has been bad, but not catastrophic. 

WTI Crude Oil 20260726

WTI Crude Oil One Year Chart as of 24 July 2026

While nervous sentiment can be blamed on the situation in the Middle East the past handful of months, the downturn which has occurred for Google and other important companies on the Nasdaq 100 involved or seen as having an ancillary association with AI needs to be considered a legitimate reaction because of worries surfacing regarding the ability to simply pay for all of the research and infrastructure. 

In order to power AI it is becoming clear that energy costs are part of investing frameworks. Concerns about an AI bubble started to gather an audience last fall and the rumblings have grown louder, yet it can be said the ability of Google and many other companies to gain the past year in value still outweighs this current downturn experienced the past couple of months.

The Iranian war which is ongoing, appears to be entering a phase in which financial institutions are having to succumb to the notion of higher prices not only for WTI Crude Oil but other energy resources with a mid-term viewpoint. While there is abundant supply of Crude Oil worldwide, the current problems surrounding navigation and logistics are causing pandemonium in a consistent manner via WTI’s price as Middle East nations try to ship to their clients. This is causing many Asian nations to look elsewhere for their energy, Brazil has seen an increase in orders. And because of the upwards trend in fuel costs again, the Federal Reserve will have to look hard at inflation data and play a game of interest rate mania, which investors will have to calculate into their outlooks regarding debt ratios.

What does this have to do with Google and AI?

People like nations will search for the easiest and most cost efficient pathway to access their needs. Anthropic, OpenAI, Kimi K3, Microsoft Copilot, DeepBlue Technology, Meta, Sakana AI, IBM, Nvidia are only some of the companies involved in sourcing software and providing hardware to users. Many nations are involved in this AI chase and understand the importance of cybersecurity, data sharing and the problems surrounding the costs to power all of these machines.

Many of these companies above including Google are searching for a holy grail via energy supply and discussing the financing and building of energy infrastructure including nuclear capabilities. But as Google and other companies search for more energy to fuel their dependence on powering their systems for clients, they continue to be confronted by a growing wave which will eventually drown some of the companies in debt that they will not be able to recover from.

I am not forecasting an apocalypse, but I am suggesting not all of these companies which we think of as part of our everyday lives will survive this fight. Legacy companies eventually parish, just like many start ups. The realization that many companies are merely providing what the public is starting to see as necessity is a simple competitive evolution. BlackBerry, Nokia and Motorola are examples of giants falling.

It appears many investors are starting to ask hard questions about costs compared to future earnings in AI. The allure of the next big thing, which AI has been part of the past couple of years, is running into well-practiced investment cycle as froth erodes and financial institutions start to look at the accounting of the companies they are being asked to consider as long-term endeavors. Not all that glitters is gold will certainly start to create a patina on many of the so-called AI companies as they are forced to prove their worth as suppliers of a commodity.

The AI world has run into the time honored financial realization that many exotic tastes soon turn into another form of vanilla. The next big thing is always being anticipated and hoping to attract the deep pockets of investors. Certainly many of the big companies including Google are going to survive the current headwinds. but real profits could become harder to attain. Investors and speculators should not be surprised that reality has a tendency to reduce momentum.  Entropy is part of the investment world, investors and speculators always have to be ready for new disruptions and systems to emerge.

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10Y US Treasury Yield 20260716

Why the U.S Fed Should Lower Interest Rates Closer to 2%

by with No Comment AssetsBehavioral SentimentCentral BanksCharles NajjarEconomyExclusive ContentFeatured HighlightsFederal Reserve, Interest RatesFinancial InstitutionsForexInvestingRisk ManagementUncategorized

Fighting Inflation with Higher Interest Rates is Totally Counterproductive

For nearly a century, central banks have relied on one dominant prescription to fight inflation: raise interest rates. The theory is straightforward. Higher borrowing costs discourage spending and investment, reducing demand and eventually slowing price increases.

While this approach may have worked reasonably well in the past, today’s economy is fundamentally different. Applying the same monetary formula developed in the past century by Irving Fisher is obviously creating more problems than it solves. In many cases, raising interest rates has become a counterproductive way to fight inflation.

  • The first and most obvious consequence is the impact on government finances. As interest rates rise, the U.S. Treasury must refinance its enormous public debt at increasingly expensive rates. The result is an explosion in annual interest payments, which now exceed $1 trillion. Those payments are in fact a direct injection of additional liquidity into the economy while simultaneously widening the federal deficit.
10Y US Treasury Yield 20260716

U.S 10-Y Treasury Yields Five Year Chart as of 16th of July 2026

Ironically, a policy designed to reduce inflation is contributing to larger government spending through higher debt-servicing costs. Instead of easing inflationary pressures, excessively high interest rates may actually reinforce them through this fiscal channel.

  • Consumers also bear a heavy burden. Modern households depend far more on credit than previous generations. Credit cards, auto loans, and consumer financing have become an integral part of everyday life. When the Federal Reserve raises interest rates, millions of Americans see the interest on their credit card balances climb to 20% or more.

Many families attribute their declining purchasing power entirely to inflation, when in reality a significant portion of the financial pressure comes from soaring interest payments.

  • Businesses suffer as well. Higher interest rates increase the cost of financing, while the same capital could be dedicated to investment, expansion, innovation, and research. Every additional dollar spent on interest is a dollar that cannot be invested in productive activity.

A recent example is SpaceX, which issued debt carrying a yield of approximately 6.65%. Given the company’s negative cash flow, investors naturally require a risk premium. However, if the Federal Reserve’s policy rate were closer to 2% rather than current levels, the company’s borrowing costs would be at least half their current level. The extra interest payments would instead be directed toward research, development, hiring, that would strengthen long-term economic growth.

In the current race for AI, that requires heavy investments, the Fed should lower the financing burden on U.S companies. Every additional percentage point of interest represents billions of dollars transferred from productive investment to debt servicing. Money that could finance AI chips, data centers, engineers, research laboratories or new factories instead goes to creditors.

The U.S cannot simultaneously declare China its principal strategic competitor while maintaining a monetary policy that systematically makes capital more expensive for American businesses than for their Chinese rivals, that benefit from much lower rates. The Fed may intend to fight inflation, but it is also making it more costly for American companies to invest in the industries that will determine economic leadership over the decade. The Fed may believe it is fighting inflation, but it is simultaneously increasing the cost of winning the AI race.

Perhaps the greatest weakness of relying on high interest rates is that much of today’s inflation originates from supply-side shocks that monetary policy simply cannot fix.

How does raising interest rates reduce the price of oil when energy prices are driven by geopolitical tensions such as the war with Iran?

How does raising interest rates lower egg prices when shortages stem from productivity issues in the poultry industry?

How does raising interest rates lower the prices of wheat, corn, or cocoa when inflation is due to droughts, floods, or other climate-related events?

How does it reduce insurance premiums that are rising because natural disasters have become more frequent and more costly?

In each of these cases, higher interest rates are totally inefficient to address the underlying cause of inflation. Instead, they merely increase financing costs across the economy while leaving supply constraints largely unchanged.

A more effective strategy would be to fight inflation where it actually originates. Governments possess fiscal tools that can be deployed with much greater precision than broad monetary tightening. Temporary subsidies, targeted tax relief, incentives for increased production, strategic investment in critical industries, and, in exceptional circumstances, carefully designed price controls can address specific inflationary pressures without unnecessarily slowing the entire economy.

For example, if geopolitical tensions cause oil prices to spike, temporarily subsidizing fuel or reducing fuel taxes is likely to be a far more direct and effective response than raising interest rates across the entire economy. Similarly, boosting domestic agricultural production is a better solution to food inflation than making mortgages, business loans, and credit cards more expensive.

The Fed should therefore focus on reducing the financing burden on both the federal government and the private sector. Maintaining interest rates closer to 2% would significantly lower debt-servicing costs, support productive investment, and allow fiscal authorities to intervene more effectively with targeted measures when inflation arises from specific sectors.

The doctrine of fighting inflation through higher interest rates was developed by Irving Fisher nearly a century ago, in an era with very different financial institutions, consumer behavior, and sources of inflation. Credit cards did not exist. Household debt was far lower. Global supply chains, geopolitical energy shocks, and climate-related disruptions were not defining features of inflation.

The modern economy requires modern solutions. Rather than relying almost exclusively on higher interest rates, policymakers should recognize that today’s inflation often demands targeted fiscal responses. Persisting with an outdated monetary framework risks imposing unnecessary costs on governments, businesses, and households while failing to address the real drivers of rising prices.

Supporters of high interest rates often argue that they are unavoidable whenever inflation rises. Yet international experience suggests otherwise.

Switzerland has repeatedly maintained policy interest rates close to 1%, or even below zero in previous years, despite being exposed to many of the same global shocks affecting other economies. Switzerland imports energy, is affected by fluctuations in oil prices, and faces the same geopolitical uncertainties. Yet the Swiss National Bank has generally preferred to tolerate modest inflation rather than impose unnecessarily high financing costs on households, businesses, and the government.

This illustrates an important principle: not every inflation shock requires an aggressive monetary response. When inflation is primarily imported through energy prices or supply-chain disruptions, forcing the entire economy to pay dramatically higher borrowing costs creates more economic damage than the inflation itself.

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Nasdaq 100 20260608

Nasdaq 100: Terrible Friday Being Confronted by Manic Monday

by with No Comment AMT MarketsAssetsBehavioral SentimentBusinessEquitiesFeatured HighlightsFederal Reserve, Interest RatesFinancial InstitutionsForexMajor Global Equity IndicesRisk ManagementSpeculatorsUncategorizedWorld

Fear of the Middle East Not the Main Motivator for the Nasdaq 100

After Friday’s selling surge and a fall of -4.77% with a close of 28,957.60, the Nasdaq 100 futures trading this morning has actually seen an increase and is near the 29,479.00 mark as of this writing before the cash Nasdaq 100 market opens.

Friday’s selling nightmare for traders who found themselves stubbornly locked into what were to be short-term buying positions and saw the Nasdaq 100 plummet -4.77%, probably woke this morning believing ugly conditions may not stop. An escalation in military action via proclaimed retaliatory moves between Israel and Iran started today’s trading with a high degree of more anxiousness. USD centric strength in Forex was demonstrated early.

Nasdaq 100 20260608

Nasdaq 100 Futures Value 1 Month Chart as of the 8th of June 2026

However, in the past couple of hours calmer heads have prevailed among financial institutions and USD centric buying in the broad Forex market has run out of steam – at least momentarily. For instance the USD/JPY is near 159.927 currently, opposed to earlier highs seen this morning which challenged the 160.400 vicinity. What does this have to do with the Nasdaq 100 and its current status? 

It appears via futures trading that large players may also have taken a sedative and looked at the index as having been oversold on Friday. The Nasdaq 100 has actually gained early today and signs that a de-escalation of military force between Israel and Iran is being reported. However, that still leaves day traders wondering what will happen as the cash market opens soon and volumes increase.

Let’s Say Quiet Prevails the Remainder of the Day

Not because of a utopian outlook, but a geopolitical perspective, let’s try to image Iran’s stated intentions of no more retaliatory strikes being launched towards Israel as true. The past couple of hours have been more tranquil as a signal in case you are wondering. Then investors and financial institutions will have to digest the Middle East concerns as they have done over the past couple of months in U.S equities, and decide to operate again on the Nasdaq 100 with near and mid-term outlooks.

Friday’s huge selling was blamed by some on the likelihood of a ‘potential’ U.S Federal Reserve interest rate taking place on the 17th of June. This because better than expected jobs numbers showed to some that the U.S economy was running hot once again. 

Additionally expressed fears, which are legitimate, about higher energy costs sparking sticky inflation have been discussed and worried about aloud. Yet, again let’s decide to say even if U.S inflation numbers via the Consumer Price Index come in higher than expected this Wednesday via the coming CPI data, that doesn’t shut the door on the possibility the new Fed Chair Kevin Warsh won’t fight against an interest rate hike during the FOMC meeting next week. In other words it still seems rather unlikely – to me – that the new Federal Reserve Chairman is going to want to initiate higher interest rates the first month on the job. So what if there was another reason for the steep selling on the Nasdaq 100?

Not Paradise but Purgatory

The Nasdaq 100 actually has other questions which have been raised as possible fodder for its large selling this past Friday. Was it spawned because of profit taking by those who took advantage of the index’s fabulous rise knowing that many institutions had been front running the IPO of SpaceX which is scheduled to happen on the 12th of June – this Friday? 

Did large players who rode the wave of frontrunning by financial institutions up in the Nasdaq 100 since late March, decide to cash in profits. There is plenty of nervousness surrounding what will take place with SpaceX in the coming months and long-term via outlooks because of its rather inflated valuation which looks like it will be around 1.7+ Trillion plus at share values of $135.00 per share this coming Friday. 

Questions surrounding SpaceX’s price per sales rhetoric, this instead of price per earnings (because SpaceX is not making a net profit) is just one example. While denying Elon Musk’s genius and ability to create clamor for his companies has proven to be a losing proposition for many, doubters still remain. 

Folks might have cashed out winnings on Friday and decided to now wait on the sidelines to see where behavioral sentiment takes the Nasdaq 100. After two full months of paradise for the Nasdaq 100, a few days of purgatory and seeing which direction U.S indices go may be the right decision by folks who rely on clarity; this as the Middle East gets untangled (or becomes more complicated), the Federal Reserve offers insights on the 17th of June, and large financial institutions lead the way regarding investment decisions.

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Gold 20260622

Gold: Intriguing Technical Support and Curious Sentiment Shift

by with No Comment AssetsBehavioral SentimentCommoditiesFeatured HighlightsFederal Reserve, Interest RatesInvestingRisk ManagementSpeculatorsUncategorized

Mid-Term Technical Support and Lower Price Make Gold Interesting

Gold has faced difficult speculative circumstances for traders with a bullish perspective since early February, this as the price of the commodity has fallen from highs. The price of the commodity is around $4,5220.00 for the moment, with its typical fast price action flourishing. Importantly, the precious metal is also traversing slightly above rather intriguing technical support when a mid-term perspective is used.

On the 29th of January Gold challenged the $5,600.00 vicinity, this as metal commodities soared including Silver and Platinum. Silver in late January touched the $120.00+ mark, Platinum in the last week of that month hit and penetrated $2800.00. Silver as of this morning is near $75.00 and Platinum is around $1937.00. The speculative momentum that drove the metals higher had a lot to do with fever pitched buying as large players feasted and smaller retail traders tried to ride the upwards wave.

Gold 20260622

Gold One Year Chart as of 22nd May 2026

Silver, Platinum and Gold Lost Their Appeal

For the moment it appears hedge funds have turned their attention away from the metals as a speculative playground. Fast profits are likely coming from other arenas, WTI Crude Oil and other energy resources are big betting areas as the Iranian situation remains at the forefront of attention.

Since the start of the military escalation in Iran all three metals have essentially lost value. Silver was around $94.00, Platinum close to $2,370 and Gold near $5,280.00 on the 27th of February. The price of WTI Crude Oil is trading with the $100.00 level acting as a technical magnet now, on the 27th of February WTI was near $67.00. It doesn’t take a brain surgeon to figure out where all of the price action has moved to as folks trading Crude Oil are certainly getting their kicks and maybe even profiting as they take advantage of support and resistance levels as rhetoric and saber-rattling flares about Iran.

Buying Gold with a Mid-Term Outlook

However, as Gold swims near the $4,522.00 mark it raises curious questions regarding its current value and how sentiment may develop within the precious metal over the mid-term. Putting to the side Silver and Platinum, Gold is intriguing because the specter of inflation is causing nervousness. The U.S Federal Reserve is now in a position in which it may have to start increasing the Federal Funds Rate again. 

President Trump wants lower borrowing costs, but because of the escalation in fuel costs effecting manufacturing, logistics and agricultural are all suffering. It will be hard for the new Fed Chair Kevin Warsh to simply wave off rising prices in the U.S as a short-term murmur. The mid-term now appears capable of sustaining inflationary winds. Gold may start to receive attention from investors again who are not looking to speculate on the precious metal, but to hold the commodity as a hedge.

  • Day traders as always will face intraday volatility with Gold if they are trying to capture a reversal higher.
  • However, if investors start to believe Gold needs to be looked at again via portfolio accumulation, and hedge funds make it a speculative party, the precious metal may start to see not only more attention but a buying surge develop again over the mid-term.
  • Gold around the $4,500.00 mark looks relatively secure as an investment plateau for folks looking for a long-term buying opportunity.
  • Day traders may start thinking about trying to take advantage of potential incremental shifts that might start to develop in Gold to the upside in the near-term and coming weeks.

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postN87

AMT Top Ten Miscellaneous Missiles and Missives for the 29th of March, 2026

by with No Comment AssetsBasketballBehavioral SentimentBusinessEquitiesFeatured HighlightsFinancial InstitutionsInvestingRisk Management

The Iranian War Dominates our Lack of Humor

10. Final Four: The Men’s NCAA Basketball Championship will be set after today’s games. The Arizona Wildcats, our pick, advanced to the Final 4 by beating Purdue last night. Michigan is favored to beat Tennessee and the Duke vs. UConn game is anticipated to be close. The University of Illinois advanced by beating Iowa on Saturday and maybe the biggest underdog – if the Volunteers lose to the Wolverines today.

postN87

AMT Top Ten for the 29th of March 2026

9. Jobs Data: U.S Non-Farm Employment Change numbers will be published during a banking holiday on the 3rd of April, this as the Iranian war shadows investment sentiment. Will potential jobs numbers results create nervousness on Thursday, and side effects Monday the 6th of April? 

8. Private Equity: Outflows remain a problem for BlackRock and other firms as deal making comes under a bright light. Investors are questioning valuations, lack of exits and money that sits in ‘zombie’ funds. Imposed limits on redemptions by some firms have created nervous indicators. Is the private equity problem correlated to lackluster momentum on Wall Street, this as desire for the next big thing runs out of marketing hyperbole?

7. 10-Y Notes: U.S 10-Year Treasury yields finished the week near 4.43%, Friday’s price action saw an apex around the 4.48% vicinity, highlighting nervousness. On Friday the 27th of February 10-Y yields were close to 3.94%,

6. Forex: USD/JPY ended this past Friday around 160.250, making it cheaper for tourists to visit Japan as cherry blossom season starts this week and lasts into early May. However, the Bank of Japan and Japanese citizens are not amused by the weakening Yen. USD centric strength continues to resonate loudly. 

5. Fed: Potential drama surrounding the U.S central bank and the replacement of Fed Chairman Jerome Powell has taken a backseat to the Middle East conflict. Concerns about inflation are legitimate. The Federal Reserve will be hard pressed to defend an interest rate cut in the mid-term.

4. President Trump: Speaking from both sides of his mouth (and his opponents might say another area of the body) may be strategic genius from the White House regarding Iran or prove to be a lack of focus. However, it certainly keeps everyone guessing what is going to happen next in the Middle East.

3. $100.00: WTI Crude Oil prices have remained below the one-hundred level for the most part during the Iranian war, yes – there have been outliers above. Will we begin to see sustained prices above the century mark this week? Short-term reactions to the U.S military potentially seizing Iran’s Kharg island would certainly cause price chaos, but could it also soothe some large players in the energy sector via mid-term outlooks? 

2. Good Friday: The holiday at the end of this week will be effected by anxious behavioral sentiment. The potential of a long weekend with plenty of noisy chatter could make for nervous investors this coming Thursday as they position themselves ahead of possible escalating storms.

1. Fear: The S&P 500 and Nasdaq 100 have entered corrective depths. Who will be brave enough to start looking for bottoms as the Iranian war rages with no end in sight? Will a reversal upwards emerge this week?

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postN87

AMT Top Ten Thoughts and Trepidations for the 22nd of March, 2026

by with No Comment AMT Top TenAssetsBasketballBehavioral SentimentCommoditiesEquitiesFeatured HighlightsFinancial InstitutionsInvestingRisk ManagementSpeculatorsWorld

The Return of AMT's Top 10 Illustrious 'Weekly' Salvos

First we must congratulate those who were willing to climb out from under their rocks (and bomb shelters) to offer musings. But let’s not digress….. to the AMT Top Ten List we go.

postN87

AMT Top Ten for the 22nd of March 2026

10. March Madness: The NCAA Men’s Basketball Championship is underway. Some of the more hated schools remain catalysts. Our pick, the University of Arizona Wildcats. 

9. Bitcoin: Traversing above 68,000.00 USD currently almost feels like an accomplishment considering BTC/USD was near 63,000.00 in early February and again in early March. But do not blink your eyes. BTW, MSTR (the much loathed MicroStrategy by some AMT folks) went into this weekend below $136.00 per share.

8. South Africa: The USD/ZAR finished Friday near 16.96800 depending on bids and asks. On the 29th of January the currency pair was close to 15.65000. The South African Rand has done well over the long-term, but it is correlating to the broad Forex market concerns. Day traders should not take things personally, and accept that risk adverse moves – particularly as a major war rages is part of speculation. Near-term viewpoints can differ with long-term prospects. 

7. Not Glimmering: Gold at the start of the Iranian war was around $5,260.00, it has fallen to a mark of $4,491.00 this weekend. Showing gold’s speculative momentum beforehand hand, outmatched current values. Where next?

6. Silver: Above 120.00 USD briefly towards the end of January, the commodity is below 68.00. Wild betting has caused a drop of more than 42%. Too much exuberance.

5. Risks: U.S 10-Year Treasury Yields were below 3.95% on the 27th of February, via Friday’s close rates are above 4.38%. Can you spell f.e.a.r?

4. Safe Haven: The U.S Dollar Index which had been showing solid downside is near 99.500, on the 27th of February it was around 97.850 – a rather legitimate rise. 100.000 may be a target by some large players.

3. Shrieking Hyperbole: WTI Crude Oil prices are certainly getting plenty of attention. However, voices expressing concern about WTI touching higher values starts to sound like an auction in order to get attention for the circus barkers. WTI remains near 100.00 USD and this mark is a barometer. The price is high and it can go higher, but expressed fear about $140.00 and $200.00 should be treated with disdain in the near-term.

2. Iran War: The conflict in the Middle East cannot be downplayed, but it can become fearmongering by Cassandras’. The U.A.E is still open for business and other nations in the Middle East are functioning. Yes, there is noise and the situation can grow more dangerous. But the potential of freedom for the people of Iran is a solid goal, though some may find this naive until it is proven. Can it become fact?

1. Coming Attractions: U.S stock markets are rightfully nervous. Friday’s close for the S&P 500 has brought it into terrain that challenges its 200 day moving average. The combination of weak technical attitudes and behavioral sentiment is a dangerous mix. Risk management may not be enough for day traders to survive current conditions, sitting on the sideline instead of betting on equity indices intraday may be more efficient and less lethal.

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post303

India and the U.S Govt Shutdown: Quick Market Thoughts

by with No Comment AMT MarketsAssetsFeatured Highlights

India and the U.S Govt Shutdown: Quick Market Thoughts

President Trump has been ramping up his claims that India is no longer going to buy Russian oil, he made a statement regarding this belief yesterday once again. As the White House threatened to initiate tougher sanctions against India, there seems to have been some movement towards a reconciliation between the two powerful nations.

The Trump administration is clearly trying to limit the amount of purchases of Russian oil by India to increase economic pressures on Russia, and reportedly India may be starting to actually buy less oil. India has certainly not stopped buying Russian oil in a maximum ‘fait accompli’, but if the nation continues to show a willingness to purchase less energy resources from Russia, this will go a long way in preserving a good U.S and India association. A stronger relationship between the U.S and India can achieve a vital economic and military correlation for the both nations. Improved friendlier tones from New Delhi and Washington D.C appear to have reassured investors in the Indian equity markets via highs currently being seen on Nifty 50, which are now within sight of apex values from late September last year.

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Nifty 50 One Year Chart as of 23rd October 2025

India is a vital and important part of U.S policy as it attempts to also create pressure on China too. By maintaining political and business dealings with India, the U.S can and should look upon this joint relationship as a vast long-term strategic interest. India understands this as well. The ability of India and the U.S to remain ‘friendly’ allies, and the prospect of creating a vigorous economic and military partnership should be one of the U.S government’s essential missions.

India does have strong connections to Russia the past handful of decades politically and economically via its non-aligned status. India will certainly maintain its dialogue and sometimes cooperative dealings with Russia. However, if India and the U.S maintain a solid relationship with the prospect of increasing their economic and political ties this could substantially change dynamics on the Asian continent.

U.S Government Shutdown Since the 1st of October

The U.S government has now been shutdown for over three weeks as Republicans and Democrats remain stubborn about compromise. Both sides have made the shutdown a political game. While each party claims they are doing what is best for the nation and preach to their collective voting bases, the stalemate could start to have uglier effects regarding wages not paid for many U.S employees on the 1st of November.

post303
Dow Jones 30 One Year Chart as of 23rd October 2025

A lack of government salaries not being dispersed will cause an economic hit via consumer spending and create at a minimum some temporary damage for GDP numbers. Remarkably, and to be clear about this potential impact, Wall Street hasn’t seemed to care yet, but this could start to change. As the U.S economy rumbles powerfully forward without a major downturn in the major equity indices, politicians appear to be comfortable acting like spoiled children on both sides of the aisles engaged in accusing the other side of misdeeds.

Likely to start changing attitudes among Republicans and Democrats in the next two weeks are the coming Federal Reserve’s FOMC Statement during the end of October, and voting results via key political races in the first week of November.

Wall Street wants clarity regarding interest rate outlooks for November, December and early next year. Investors might not get a clear picture from the Fed next week, taking into consideration the Federal Reserve will not have up to date official U.S economic data because of the government shutdown. Meaning the Fed will likely issue a 25 basis point rate cut on the 29th of October and say it is uncertain about the coming few months because it does not have enough inflation, employment and GDP information to form a concrete opinion. The joke of coarse being the Fed seldom seems to have a strong opinion, but now can use the government shutdown as an excuse.

And now for contemplation, let’s look at the election in NYC for Mayor. A bona fide socialist may get elected in New York City who carries the historically misguided and dangerous wisdom of a Marxist. The economic and social practices of Marxism have proven utter failures for over one hundred years consistently. If NYC suffers a victory from the socialist candidate running as a Democrat, Wall Street and many financial institutions based in the city will not react favorably.

In the meantime, U.S equity indices remain elevated, cautious and within sight of record highs. The Nasdaq, Dow Jones and S&P along with other financial assets are producing choppy dangerous conditions for day traders who are attempting to wager on daily changes and suffering from the cautious behavioral sentiment being generated. Investors who look towards the mid and long-term are likely more comfortable, but are certainly keeping an eye on what is going to transpire over the next two weeks. Gold and Silver have come off their speculative highs. Forex continues to create volatile conditions as financial institutions appear unready to make bold predictions about what the Federal Reserve will do into January 2026.
post287

Forex: Tomorrow is Known, October and Beyond are Uncertain

by with No Comment AMT MarketsBehavioral SentimentFeatured Highlights

Forex: Tomorrow is Known, October and Beyond are Uncertain

The U.S Federal Reserve will cut its Federal Funds Rate by 25 basis points tomorrow. The big question all financial institutions would like some clarity about is whether the U.S Central Bank will strongly suggest that another cut of 25 basis points will need to take place in late October during the next FOMC meeting.

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EUR/USD One Year Chart as of 16th September 2025

Forex has certainly seen the USD weaken because a definitive interest rate cut has already been factored into mid-term outlooks. Those who are betting on a 50 basis point cut tomorrow are spitting into the wind and most likely wrong. The Fed under Jerome Powell has proven time and again that it is cautious. The word uncertainly is likely to be heard on Wednesday, even as the Fed Chairman admits conditions warrant cutting interest rates further.

And this is where it will get tricky for day traders betting on conditions beyond tomorrow. Since the quarter of a point cut has been factored into Forex already, and the EUR/USD, GBP/USD and even the USD/JPY are bouncing up against technical inflection ratios for the time being, powerful reactions and dangers will ignite based on the perceptions generated about late October outlook. It is likely some large financial institutions have already priced a rate cut of 25 basis points into the USD already for their October outlooks, meaning some big houses have accounted for a 50 basis point cut mid-term.

It is probable some larger firms have remained conservative, and have not leaned into overly confident cash forward contracts for their corporate clients. This because they want to be certain the Fed is definitely setting the table for another interest rate cut in October.

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Gold Five Year Chart as of 16th of September 2025

Nothing is guaranteed and Fed Chairman Powell is likely to state this obvious point tomorrow. However, he may have to admit the jobs market looks weak. And he may have to also acknowledge, that although he and other FOMC members remain concerned about the threat of inflation, that for the moment it remains somewhat tame. This is where a secret ingredient in Forex trading tomorrow may fuel volatility. Inflation fears telltale signal is being seen in the current price of Gold which is within record territory and sight of $3,700.00 as of this writing, this even as the 10-Year U.S Treasury yields have decreased.

As a critic of the Federal Reserve’s conservative approach to cutting interest rates the past half year, I have to acknowledge that it is important that the Fed remains nimble, they cannot simply give into pressures from political circles. However and unfortunately, the Fed has been anything but nimble the past six months. The Fed should have cut interest rates by 50 basis points in total in the late spring and early summer, they did not. Now they are once again behind the proverbial curve and in a position in which they are being forced to be reactive instead of proactive.


Again the Fed has at its disposal high tech quantified data via its distinct Fed Districts to know the economic landscape and react at a quicker pace. It chooses not to do this efficiently, this was a feature of the Fed’s inability to accept that inflation was a danger almost four years ago and its snail like reaction which caused economic harm. Now the Fed finds itself in a position in which it should be admitting that it should have been cutting interest rates six months ago, while also knowing logically storm clouds are on the horizon regarding murky economic outlooks due to the threat of inflation actually increasing in the mid-term. Justification for a nimble Federal Reserve remains a pragmatic desire.

Here’s the thing, the Federal Reserve is going to cut the Funds Rate by 25 basis points tomorrow and say they are considering another cut in October. The Fed will probably also say after another cut in October, that they anticipate taking a way and see approach into the end of this calendar year.

Regarding the potential reactions of the EUR/USD, GBP/USD and USD/JPY tomorrow and into Thursday, volatility needs to be expected. The consolidation we have seen develop the past few days near important levels that seemingly are holding back large value moves will vanish for day traders. Small retail speculators in Forex need to understand what they view as massive moves are often considered simple small mathematical gyrations by financial institutions which are not only participating in the cash forward business via FX rates, but also taking part in hedging via futures trading through the likes of the Chicago Mercantile Exchange and other venues.

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USD/JPY One Year Chart as of 16th September 2025

It needs to be noted the Bank of England will release its Official Bank Rate on Thursday along with its Monetary Policy Summary. And the Bank of Japan will issue its Policy Rate and Monetary Policy Statement on Friday. The BoE is not expected to change its borrowing rates on Thursday, and the Bank of Japan is expected to stand in place too. It should be pointed out that the Bank of Japan does have room to increase its borrowing costs, but the government of Japan appears to be married to maintaining a weaker Japanese Yen, much to the chagrin of some economists.

If the Fed admits they need to likely cut interest rates again in October this might spur on some USD weakness and create volatile conditions tomorrow and Thursday. However, if the Fed offers the phrase that they will take a wait and see approach after October, until further economic data can be accessed in November and December, then the USD may start to show signs of firming. The Fed’s interest rate is 4.50% today, by the end of Wednesday it should be at 4.25% with signs that by the end of October it will be 4.00%. Looking for more than those clues is speculative, financial institutions want answers like everyone else.