'Fast Money' traders debate Treasury Sec. Bessent's call to lower Fed rates impact on the markets

Interest Rate Cut Expectations and Market Impact - Treasury Secretary suggests the Fed should cut rates by 50 basis points next month, with an ultimate reduction of 150 to 175 basis points [1] - Small cap Russell 2000 saw the biggest gains, indicating potential rebound in out-of-favor groups and sectors if rates drop [2] - Market had previously priced in six rate cuts for 2025, but the S&P was significantly lower at that time [3] - Lower rates could benefit commercial real estate, which has been hurt by higher rates [6] - Lower rates lead to higher multiples and stock prices due to discounted cash flow [6] Labor Market and Economic Growth - Treasury Secretary's reasons for rate cuts include a softening job market [3] - There's a contradiction in the administration's stance on the job market revisions [4] - Unemployment is at 42%, higher than last year's below 4% [10] - GDP growth in the first half of 2024 was approximately 125% [10] - Tariffs of 15% or 30% on imports, especially from China, could weigh on growth [11] Investment Strategies - Equities are expected to continue to rally in a 150 basis point cut environment [14] - A barbell strategy is suggested, focusing on high multiple tech stocks and value stocks [14] - Financials and healthcare sectors are identified as potential areas for investment [15]