The FED rehearsed a 50 basis point cut and did so by leaking the news through an important journalist. The rehearsal seems to have gone well. This will have significant effects on all asset prices. The rise in the stock market in the last 3 days is already an indication of this. There was a sharp turn in the stock markets. Because the FED leaked information. Let me try to explain the possible effects of this leaked information on both stocks and Bitcoin and how it changed my views. I found the stock market movement on September 11 very strange. That day, the S&P 500 started the day with a 1.62% decrease due to inflation that was slightly higher than expected. But then it rose 2.83% from that bottom and closed the day with an increase of over 1%. This is something rarely seen in the history of the S&P. The S&P 500 has had an ETF since 1993. For example, when we look at it, it has only had such a sharp decrease and increase within a day 9 times since 1993. This is normally a sign of a market turning. So it is a sign of turning positive. But I was skeptical because the only increase came from Nvidia and artificial intelligence stocks.

I was also not sure what the FED would do next week because there was a possibility that there would be a lot of news about recession. In fact, I was going to be defensive because there was a possibility that the markets would react negatively whether the FED made a 25 basis point cut or a 50 basis point cut. However, the market confirmed this technical move and has been rising ever since. When we look at the S&P 500, it has risen by around 2% since that point. There is a similar situation in the IWM, the main ETF for small stocks. It fell by roughly 2.20% that day, then came back and has been rising ever since. From that bottom, the IWM rose by 4.03%. Then it started to rise rapidly again. It is not possible to predict this move, which has been repeated only 9 times since 1993. I was guessing that this decline would drag us down a little more or that the market would be volatile. It made a bottom and came back.

So what happened that day? Nothing happened that day. Or rather, we thought nothing happened. But in fact, the news had already leaked to the market. That leaked news was that the FED would make a 50 basis point cut the next week. Because when we came to September 12, the market fell again at the opening. Because the producer price index inflation was expected to be high that day. But the market then made a bottom and recovered. Do you know why it recovered? Because of an article written by a Wall Street Journal journalist. Would an article change the markets this much? It is important who wrote the article, or rather whose trumpet it is. The name of our friend who wrote the article is Nick Timiraos, those who have been following me for a long time know that Nick Timiraos is a FED trumpet. The FED uses Nick Timiraos a lot for leaks in advance for market surveys. That is why there is even a phrase called Nickileaks. We have seen examples of this in history before.

For example, if I am not mistaken, the FED is raising interest rates in 2022. At that time, the markets were expecting the FED to raise rates by 25 to 50 basis points. Nick Timiraos wrote an article and said it would increase by 75 basis points and it did. He prepared the market in advance. Similarly, during the banking crisis, the FED decision was coming at the beginning of 2023 and the FED cannot raise interest rates. In fact, I was of that opinion and this is one of the articles where I was wrong. But Nick Timiraos came out and wrote an article 34 days before the FED decision. He said the FED will raise rates by 25 basis points. He does not say it exactly like that. But he does it with such a tone and the market knows who Nick is so well that it can read what it means. The FED leaks information in advance and looks at the market's reaction to the information it leaks. If the market's reaction is in the direction the FED wants, the FED interest rate cut or overlap is parallel to that leak.

If the market expectation is different than the FED's expectation, the FED does not make that discount or increase and what will happen, the FED has no responsibility, it is just a journalist who leaked it. Therefore, the FED uses Nick Timiraos to both leak information in advance and adjust the atmosphere of the market and also conducts a market test. So why did the FED need a market test? I had stated that the FED will either make a 25 or 50 basis point discount and we are not sure of the market's reaction in both cases. At 25 basis points, the market may say that the FED is doing reasonably. So, there is no recession, things are good or we will actually enter a recession, the FED is late, the market may evaluate it this way. At 50 basis points, the FED is probably panicking. There is something we cannot see or the FED is doing a very smart job, it may also evaluate it as preventing us from entering a recession. As far as I understand, thanks to this test, the FED has tested that the market will find 50 basis points good and this is very important for the FED. Because the FED does not want to put America into recession, and they are right about that.

Because America has an interesting feature. The market can enter a recession just because the stock market has fallen in America. In other words, it is normally the opposite, the market falls because a recession is coming, and the opposite can happen in America. Because as far as I can see, many companies are preparing to lay off employees due to the deterioration in economic data, and if the stock market values ​​fall, these layoffs will accelerate. Because CEOs are responsible for protecting the stability and market value of companies, and don't forget that many of their salaries are indexed to the market value of the company. I think the FED is reading this and doesn't want to risk the market right now. Powell had already told us clearly. From now on, what is important to me is not inflation, but what is happening in the labor market, and they perceive slight deviations in inflation data as temporary, which may be reasonable. As I mentioned before, rents seem to be higher than they should be, and this month's increase in transportation, especially in air transportation, and the increase in hotels may be completely seasonal.

The FED, which evaluated these, wanted to try 50 basis points and the experiment seems to have been successful. The stock market reacted positively. I think the probability of the FED cutting by 50 basis points has increased a lot because of this. Of course, it is impossible to be absolutely sure of this. I guess that we poor small investors were able to read this article by Nick Timiraos one day later. In fact, the big players of the stock market, the market makers, reached that article by Nick at this low point and knew that the market would turn. The article was also conveyed to us one day later.

So what did the article say? In fact, at first glance, the article seemed quite balanced. The title was "The Fed's Rate-Cut Dilemma: Start Big or Small?" and it included balanced views. But in a few paragraphs Nick Timiraos clearly and explicitly stated that both Powell and the other Fed committee members' main priority was unemployment, so 50 basis points was a closer possibility. The market really liked this and started climbing upwards. Right now it is starting to be priced in that the rate cut will be 50 basis points and the market will react well to it. I said take these markets up. In fact, yesterday was a great day.

There was a huge fall in Nasdaq since the beginning of September, it almost made up for all of that fall from the bottom and came back. So whether this will continue is a difficult question, frankly. Because I think the Fed's rate cut is now somewhat priced in. It is very, very difficult to know whether it will make another upward move after cutting 50 basis points that day or whether it will be a sell the news event. But basically if the FED is really cutting rates in a soft landing scenario and the market is convinced of this, the market will normally be in the direction of the one-year It is upwards in the term. It has been like this in the past, but if news comes that the recession has already started along with the FED's interest rate cut, then unfortunately the FED's lateness will be priced in. But in any case, we are in a period where money and cash are abundant.

That's why I've been doing a lot of Bitcoin trading lately. Also, Bitcoin is open 24/7, it moves more or less together with Nasdaq. If money is going to be abundant, Bitcoin should rise, theoretically that's how it is. Gold is doing its part in this regard. Bitcoin seems to have started to move like this for the first time yesterday. It may have gotten rid of the Blackrock pressure a little or Black Rock may be joining it in this period. I'm also long in stocks, I thought I would take out my cash for 35%, but I didn't have to. With this good news, I started building positions again. I'm around 30% in cash right now.

Of course, the situation is like this, I could be wrong, and what I'm telling you is not investment advice. But as far as I can see, it seems like the FED will be able to convince the market of the soft landing scenario. It seems that it will support this with a 50 basis point cut. It is impossible to know how stocks will behave in the short term. The same goes for crypto, but in the long term, if this scenario happens, I think it will be positive for the markets for the next year. In other words, my bullish vein has started to swell again as the uncertainties decrease.

Of course, election uncertainties are still ongoing. Also, balance sheets are coming soon. As you know, the thing we suffered the most in the last quarter regarding balance sheets was the companies that brought good balance sheets, but many of them revised their expectations for the future downwards. Were those revisions real this quarter or did the CEOs actually see it well and did they do it to get the market used to such bad news and surprise us with good news later, this is called sandbagging. We will see which one is right, but I am frankly scared. Because we know that many companies are close to laying off employees right now. The problems in the manufacturing sector in particular are quite obvious. Let's see what will happen. That's why I am more positive right now, I am not super positive. There is still a lot of uncertainty, the election is one of them. But I can say that my barometer has shifted towards the lighter bull side.

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