Reality Check
The Fed's 'risk management' rate cut... Google Trends: 'Help with mortgage'... Homebuilders could use a boost... History says these stocks win... Tonight: Joel Litman on the market's 'greatest moneymaking anomaly'...
The Fed's latest message...
As was widely expected, the Federal Reserve lowered its benchmark lending-rate range by 25 basis points this afternoon to between 4% and 4.25% – its first rate cut in nine months. Then it gave investors more of what they typically like to hear...
More juice is on the way soon.
In their quarterly economic projections, the central bankers said they expect the fed-funds rate to be another 50 basis points lower by the end of the year. Presumably that means 0.25-percentage-point cuts at its final two meetings of 2025 in late October and early December.
Not only that, but the Fed members think inflation will be running "hot" – and expect to cut rates anyway. That would normally be cause for celebration among risk-takers willing to bet on a booming economy and market. But that's not exactly what we saw today.
The major U.S. indexes were mixed, remaining near all-time highs, heading into this afternoon's Fed meeting.
Upon the release of today's Fed decision and projections at 2 p.m. Eastern time, the indexes initially spiked higher. Then they traded back to mixed levels just ahead of Fed Chair Jerome Powell's post-announcement press conference and as he spoke.
Maybe that's because reality is setting in for Mr. Market. Powell said the Fed is looking to cut rates because of a "moderation in growth" and a "slowdown in consumer spending," and warned that the "downside risks to employment have risen."
The labor market is the biggest concern now...
This meeting was one where the folks at the Fed publish their quarterly Summary of Economic Projections. This includes outlooks for GDP, inflation, and the labor market for the rest of the year and the years ahead.
Forget for a moment that these projections are almost always wrong. Wall Street cares anyway for the insight it provides into future Fed policy.
This time, the Fed members are projecting 1.6% GDP growth for 2025, a 4.5% unemployment rate (higher than it is now), and 3% inflation (which Powell said can still be influenced by tariffs). All the while, they're saying to expect additional rate cuts by year-end.
Today's move is "a risk-management cut," Powell said, while acknowledging it's not "obvious" what to do with policy. But clearly, the labor market is what Powell and enough other Fed members think should be addressed.
As he said in his press conference's opening statement...
Payroll job gains have slowed significantly to a pace of just 29,000 per month over the past three months. A good part of the slowing likely reflects a decline in the growth of the labor force, due to lower immigration and lower labor force participation.
Even so, labor demand has softened, and the recent pace of job creation appears to be running below the break-even rate needed to hold the unemployment rate constant.
So, put this together, and the Fed expects to cut rates because of a weakening labor market... yet even while inflation remains "hot" and above its supposed 2% target. Our "higher prices" radar is going off right now, but so is the outlook for the economy in general.
We'll see how the market digests all this new information moving ahead.
Politics obviously colored this meeting...
It's the first Fed meeting for the freshly appointed member Stephen Miran, chairman of the White House's Council of Economic Advisers, whom President Donald Trump nominated to fill a seat that opened last month. He joined dozens of other central bankers, including Lisa Cook, whom Trump wants to fire over allegations of mortgage fraud.
Success on that front would mean a majority of the Fed voting board would be Trump appointees. That makes it more likely the Fed would implement the rate cuts Trump has urged, calling Powell "too late" to make the change.
Ahead of the meeting, Powell did not swear in Miran to his new role, as has been custom for the Fed chair to do... leaving the task to a judge.
Read into that what you want, but we say it's Powell digging at the legitimacy of Miran's roughly four-month appointment as he remains working for the White House on an "unpaid leave of absence." (Powell was extremely curt responding to an opening question about Miran today.)
Miran dissented from the majority opinion and was the only one of the 12 Federal Open Market Committee members to vote for a larger 50-basis-point cut. He assuredly also was the lone dot on the Fed's "dot plot" to say that the federal-funds rate should be at 3% at year-end.
The others said no lower than 3.5%, generally anticipating the fed-funds rate falling to 3% only in 2027. Some even think rates won't go any lower this year, so there was a wide range of opinions. We'll keep an eye on it.
One of the (several) reasons the president wants rate cuts...
In his calls for rate cuts, Trump has cited a few different factors. The first has been the government's debt... Rate cuts would help the government refinance its debt at a lower rate and save money on interest payments.
He also has his sights on a cornerstone of the economy – housing...
In July, Trump said the Fed was "choking out the housing market" by keeping rates too high. And in a post on Truth Social in August, he wrote that "people can't get a Mortgage" because of Powell.
And he's right... When the Fed started to raise interest rates in 2022, the average 30-year-fixed mortgage rate moved higher as well. It reached a 23-year high near 8% in 2023.
In short, high mortgage rates, coupled with record-high home prices, have made monthly payments for a home more expensive than ever. The average monthly mortgage payment has nearly doubled over the past five years, as Nick Gerli of the housing data app Reventure shared on X.
Our colleague and True Wealth Systems editor Brett Eversole explained just how much mortgage rates influence payments in this month's issue (Stansberry Alliance members and True Wealth Systems subscribers can read his full report here). From Brett...
Let's do some back-of-the-envelope math. Today, the median U.S. home price is $443,867. We'll round down and say we're buying a house for $400,000.
Assuming a 20% down payment, our loan amount would be around $320,000. The lowest 30-year mortgage rate on Bankrate.com is 5.57% right now. We'd end up with a monthly payment of $1,831.
But let's say the mortgage rate jumped a single percentage point to 6.57%... That would add more than $200 to the monthly payment.
The higher that rates rise, the worse the sticker shock becomes.
As a result, folks are either struggling to afford new mortgages or even repay their current loans. Data from Google Trends shows that folks have recently been searching for "help with mortgage" at the highest rate since 2008:
When the Fed cuts rates, mortgage rates typically come down. And that makes housing more affordable by bringing down the monthly payment.
Now, this doesn't always happen. Last September, when the central bank began lowering its fed-funds rate by 50 basis points, mortgage rates actually rose. Mortgage rates most directly track longer-term Treasury yields, which took off as inflation expectations grew.
Lately, though, mortgage rates have been moving lower. That may be a signal that the market has gotten less worried about inflation and believes the Fed is doing the "right" thing by lowering rates amid a weakening labor market.
Just this morning, the Mortgage Bankers Association announced that the average 30-year fixed mortgage rate has fallen to 6.39%. That's its lowest level since last October.
Cutting rates from here, as the Fed is now suggesting it will do, should put even more downward pressure on mortgage rates.
And it couldn't come at a better time for the housing market...
As we wrote in the August 19 Digest, homebuilder sentiment is "in the gutter." The mood hasn't gotten any better since...
The National Association of Home Builders' monthly Housing Market Index remained at 32 in September – matching the lowest level since December 2022. (A reading of 50 means 50% of respondents say the outlook is "good" and 50% say the outlook is "bad.")
And in August, both housing starts and building permits fell versus the previous month, according to the Census Bureau.
The annualized rate of newly begun homes dropped from July's five-month high to 1.307 million – right around the lows from over the past five years.
Building permits fared even worse, falling 3.7% month over month to 1.312 million annualized. That's the lowest since June 2019 (excluding a brief drop at the start of the pandemic in 2020).
So not only are homebuilders saying they're pessimistic about the market, but their actions are backing that point up. They're building fewer new homes, and permit data also reveals that this trend isn't about to reverse.
But interest rates are coming down.
That'll benefit one group of stocks in particular...
As Brett wrote in True Wealth Systems this month, homebuilding stocks soar when interest rates fall and it becomes more affordable to buy a home. He highlighted three separate times that homebuilder Lennar (LEN) more than doubled as mortgage rates came down, the latest instance being in 2001... From Brett...
The Fed cut rates to boost the economy as the dot-com bust took hold. Home financing got dirt-cheap... And it paved the way for the roaring housing market of the early 2000s.
Take a look at how Lennar performed as this cycle unfolded...
Falling rates kicked off a 300% rally in Lennar... another triple-digit win.
Brett didn't recommend that his subscribers buy Lennar. This one stock's performance in these environments is just one example. He expects similar surges in stocks across the entire homebuilding industry. And today's rate cut from the Fed is just the beginning. Again, Brett's subscribers can find his actionable advice right here.
One more thing before we go...
In about two hours, at 8 p.m. Eastern time, Joel Litman – the founder of our corporate affiliate Altimetry – will be going live with his brand-new presentation.
As we've mentioned in the past few days, Joel is a world-renowned forensic accountant whose clients include each of the world's 10 largest investment firms. He has consulted with the Pentagon and CEOs and taught at big business schools.
In brief, he provides his subscribers at Altimetry with insight into companies' financials – and what's really going on in the stock market and economy – in a way that you won't find anywhere else...
And right now, he's going public with what he calls the "greatest moneymaking anomaly in the market today." A new study he's put together shows it, and it involves the fact that hundreds of stocks have already doubled this year... and more could be on the way...
This "anomaly" could be your key to take advantage of the next wave of companies set to soar 100% or more in 2025. But once earnings season kicks off in just a few weeks, he warns, it might be too late.
Click here to sign up now for Joel's broadcast so you don't miss anything. In addition to getting to hear about his new research, just for tuning in, you'll also have the chance to hear four free stock recommendations. Again, it goes live at 8 p.m. Eastern.
New 52-week highs (as of 9/16/25): Altius Minerals (ALS.TO), ASML (ASML), iShares MSCI BIC Fund (BKF), Alpha Architect 1-3 Month Box Fund (BOXX), Ciena (CIEN), WisdomTree Japan SmallCap Dividend Fund (DFJ), Dimensional International Small Cap Value Fund (DISV), Western Asset Emerging Markets Debt Fund (EMD), iShares MSCI Emerging Markets ex China Fund (EMXC), EnerSys (ENS), SPDR Gold Shares (GLD), iShares U.S. Aerospace & Defense Fund (ITA), Nuveen Preferred & Income Opportunities Fund (JPC), JPMorgan Chase (JPM), KraneShares CSI China Internet Fund (KWEB), L3Harris Technologies (LHX), Lumentum (LITE), Monster Beverage (MNST), Neuberger Berman Next Generation Connectivity Fund (NBXG), Invesco WilderHill Clean Energy Fund (PBW), Sprott Physical Gold Trust (PHYS), ProShares Ultra Gold (UGL), United States Commodity Index Fund (USCI), Valero Energy (VLO), Vanguard Short-Term Inflation-Protected Securities (VTIP), and ProShares Ultra FTSE China 50 (XPP).
In today's mailbag, feedback on yesterday's Digest, which previewed today's Fed meeting... and another observation about our 52-week high list... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.
"It's absurd to claim the Fed Board as independent. All board members are appointed by the President. Powell by Trump [as chair] in 2018... Jefferson, Barr, and Cook by Biden... and Waller, Bowman, and Miran appointed by Trump.
"I agree that [Trump] makes it look obvious that he is influencing the Fed but that is what all President's do but are not usually so obvious about it. The reason Trump wants lower rates is because the U.S. Treasury cannot afford the current rates but of course he can't admit that." – Subscriber S.J.I.
"I've noticed a couple times in the last week that the 52-week high list at the end of each Digest doesn't fully fit on my phone screen. I guess it is a bull market! Or Stansberry analysts are just that good! Thanks for great insight as always." – Subscriber Beau E.
All the best,
Corey McLaughlin and Nick Koziol
Baltimore, Maryland
September 17, 2025