The Anticipation Economy

A memo from the trading floor to sanity

We've reached peak absurdity. Markets hit all-time highs on hopes the Federal Reserve will cut interest rates, while Oracle surged over 40% in a single session, adding over $300 billion to its market cap. Meanwhile, Bitcoin rose to $114,156 because... well, because everyone expects Jerome Powell to save us next week.

Let me spell this out: we're celebrating the promise of monetary easing because the job market is cracking. The S&P 500 and Nasdaq reached record closing highs as producer price inflation was slower than expected in August — prices falling, mind you, because demand is weakening. This is like throwing a party because the Titanic's boiler room finally stopped overheating.

CME FedWatch shows a 100% probability of a rate cut on September 17, with some positioning for 50 basis points. The certainty is breathtaking. When was the last time markets priced in anything with 100% confidence that didn't end in tears?

Here's the beautiful irony: Bitcoin ETFs pulled in $2.4 billion during the September 2024 cut week, yet Bitcoin plunged by nearly 40% in one month when aggressive cuts actually materialized. The anticipation economy strikes again — buy the rumor, get obliterated by the reality.

Oracle's eruption tells you everything about where we are in the cycle. A database company becomes a $300 billion AI fever dream in one trading session because Larry Ellison mentioned something about machine learning. Meanwhile, JPMorgan warns the Fed cut could spark a crash — apparently even the biggest beneficiaries of easy money are nervous about what they've created.

The producer price data gave everyone permission to believe this time would be different. Prices fell 0.1% month-over-month, driven by lower services prices — which sounds deflationary until you realize services are getting cheaper because fewer people can afford them. This is victory?

JPMorgan and Bank of America project Bitcoin could test $100,000 by late 2025, conveniently forgetting that their own analysts are simultaneously warning about crash risks. But why let cognitive dissonance interrupt a good sales pitch?

The real comedy is watching grown adults pretend that cutting rates into a labor market slowdown is somehow bullish for risk assets long-term. Sure, you'll get your sugar high. You'll get your melt-up. Traders are already pricing in three rate reductions in 2025.

But here's the thing about anticipation economies: they work beautifully until they don't. The moment Powell cuts and nothing magical happens — the moment employment doesn't bounce back, the moment corporate earnings disappoint, the moment China's property crisis deepens — all this euphoria turns into a very expensive lesson in gravity.

We're not investing anymore. We're not even trading. We're buying lottery tickets with sophisticated names, convinced that central bank alchemy can turn a weakening economy into permanent prosperity.

September 17th can't come fast enough. Not because I want the cut, but because I want this ridiculous charade of certainty to end.

The anticipation economy is about to meet reality. Place your bets accordingly.