Some brothers asked if interest rate cuts are the switch for a bull market? Can we go all in?

Lowering interest rates is certainly a positive factor in the long term, but the release of this positivity is a gradual process, not an instantaneous explosion. Currently, analysts, KOLs, and institutions have not provided clear directional judgments, indicating that the market itself is still hesitant. For ordinary investors, in the upcoming market, it should be a gradual approach rather than an All in!

For example, let me give a simple example with 25 points: lowering interest rates is not like a light switch that turns on all at once; it's more like you have a piece of land that is very dry and needs water to be nourished. However, when you first open the water valve, the water is limited and not enough to fully nourish the dry land. It requires gradual and continuous irrigation to gradually replenish it!

If it is 50 basis points, the market's brief prosperity might actually decline. This often means that the risk of recession is accelerating, which is why the Federal Reserve would choose a one-time significant action. Interest rates drop quickly, and confidence drops even faster. Continuing with the land example, 50 basis points is more like a burst water pipe, with only the water left in the pipe. To prevent loss during slow irrigation, or perhaps the real irrigation can only reach a small area, it makes more sense to just water the entire surface of the land at once.

In fact, it's just a superficial prosperity. When you plant the seedlings, they are unwilling to take root below. There is not only a lack of moisture but also the soil is very hard. Even if they can cross the hard layer of soil to access underground water, it is clearly not achievable. Although the Federal Reserve will intervene to save the market, it is like a plumber fixing a pipe; it doesn't mean that they can fix it immediately. Over time, relying solely on the moisture at the surface will inevitably lead to a day of drought, and in the end, what awaits it may only be death. Of course, this is the case for the current market. If there were a large water pump continuously providing support, it would be a different story, but clearly, that's not the case right now!

25 is more like irrigating the seedlings, which desperately root downwards. Suddenly, the irrigation stops, but the seedlings have already rooted deep enough to absorb underground moisture on their own. This is what people often refer to as a soft landing!

From a probabilistic standpoint, a 25 basis point move is more likely. The reason is simple: in August-September 2024, recession signals triggered by the Sam Rule necessitated a rapid interest rate cut of 50 basis points. However, while the current U.S. job market is weak, it has not yet reached a point of complete failure.

In addition to the magnitude, the market will also closely monitor the dot plot and whether tapering will stop. The dot plot indicates the pace of two remaining rate cuts this year and the path for next year. If we can see a combination of "stop tapering + consecutive rate cuts," that would truly signal the beginning of a monetary easing cycle.

Of course, if you choose to go all in, fate can indeed be changed. It's just a matter of which direction it will change, depending on heaven's mood.

I don't know if I understand correctly, so please point out any mistakes, brothers!
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