Following a 3.5% rally in the S&P 500 since September 11th, Jerome Powell fueled the momentum by announcing a 50-basis-point rate cut - the first in over four years. Major indices whipsawed, with the S&P 500 swinging between gains and losses. Treasuries fell, equities adjusted, and gold surged. Investors are split on whether the cut will prevent a recession or because it's already starting. Market uncertainty persists due to differing Fed and market rate projections.

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In most cases historically, rate cutting cycles mark the beginning of recessions. 1995 was an exception and one we're following closely in case we do end up in that sweet soft landing scenario. While the economy is doing well, low-income consumers are being crushed by the 21% cumulative inflation inflicted over the last 4 years. Credit card delinquency rates are now above pre-covid levels and rising quickly, though still below historical levels.

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Anchoring the economy seems to be low mortgage delinquency rates, high home equity levels, and high employment rates. Should one of these three stool legs fall, we'll have a problem.

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