The Fed cut rates, just like the market expected. So why did the market crash 1,100 points?

We had a Federal Reserve Open Markets Committee meeting today. And Fed governors took the action that most of the Wall Street "experts" thought they would.

The Federal Reserve lowered interest rates on Wednesday, but policymakers signaled caution about additional rate cuts next year in the face of stubborn inflation.

The central bank lowered its benchmark interest rate by a quarter percentage point to a range of 4.25% to 4.5%. Rates have fallen by a full percentage point since September, making it cheaper to get a car loan, finance a business or carry a balance on your credit card.

And the stock markets reacted to this news by...falling more than 1,250 points after the Fed made its decision.

Why did the market have this huge drop when the Fed gave the rate cut that was expected? Because of what the Fed thinks will happen in 2025 and beyond.

Along with its policy announcement, the Fed released updated economic forecasts in its Summary of Economic Projections (SEP), including its "dot plot," which maps out policymakers' expectations for where interest rates could be headed in the future.

Fed officials see the fed funds rate falling to 3.9% in 2025, higher than the Fed's previous September projection of 3.4%. Outside of September's jumbo 50 basis point cut, the Fed has moved in 25 basis point increments over the last year or so, indicating the central bank expects to cut interest rates two more times in 2025. In September, officials had projected four cuts next year.

Coming into the decision, markets had priced in two to three additional rate cuts next year, according to Bloomberg data. The central bank slashed interest rates by a total of 100 basis points in 2024.

Wait, you're telling me that the return of Trump to the White House isn’t going to lead to a low-rate cocaine party for the country? No, it won’t. And in fact, the Fed’s outlook has inflation going to be higher next year than it previously thought.

The SEP indicated the Federal Reserve sees core inflation peaking at 2.5% next year — higher than September's projection of 2.2% — before cooling to 2.2% in 2026 and 2.0% in 2027. That higher inflation outlook pressured markets in the aftermath of the release.

The election of Donald Trump as the nation's next president has further complicated the outlook, with some economists arguing the US could face another inflation resurgence if Trump follows through with his key campaign promises.

The bond markets are clearly worried about the direction of things, as the benchmark 10-year bond has spiked by 37 basis points in less than 2 weeks, and is now at its highest level in 6 ½ months.

So maybe the post-election “Trump-timism” that those dimwits on Wall Street wanted to believe in isn’t matching up with the reality, even before Trump comes back int office. And maybe the Fed is hinting to us that they know Trump/GOP’s economic plans aren’t going to do a damn thing to calm inflation, and instead is going to make it worse. So they're getting ahead of any foolishness they might try to put into place.

MAGAs may not be keen on the reality-based community, but I got a feeling that the effects of Trump/GOP’s economic idiocy is going to seep into their BubbleWorld in 2025 whether they like it or not. And the traders on Wall Street are now cashing in their profits before they get caught in the popping of a Bubble of their own doing.