QCP Capital: Increased liquidity could eventually drive risk assets higher

QCP Capital's latest report pointed out that at the Jackson Hole meeting, Federal Reserve Chairman Powell clearly expressed his support for lower interest rates, saying that "the time has come to cut interest rates" to avoid excessive cooling of the labor market. Last week's revised employment data reduced by 800,000, further strengthening the market's expectations of a 50 basis point rate cut in September. Currently, the market expects four rate cuts in 2024, although there are only three meetings left. Although the US stock market is close to an all-time high, the decline in trading volume and the unclear outlook for Nvidia's (NVDA) earnings report have made people cautious about whether the stock market can continue to rise. However, as Powell and the Fed prepare to start a rate cut cycle, the increase in liquidity may eventually drive risk assets higher.