Fed's at risk of getting behind the curve, says Strategas' Chris Verrone

Fed Policy & Market Rates - The market anticipates the Fed will cut rates, as indicated by the 2-year yield being 75 basis points below the Fed funds rate [2][3] - The Fed is at risk of falling behind the curve [3] Financial Sector Concerns - Publicly traded private capital stocks have not performed well, potentially signaling vulnerabilities or a preference for regulated money center banks like Bank of America or Citigroup [3][4] - Public credit conditions, measured by double B and triple C spreads, remain largely positive, suggesting no immediate major problems [5] - There are increasing discussions about private credit risks, reminiscent of the period before the 2008 financial crisis [6][7] Market Performance & Seasonality - Market seasonality suggests that a down market in the fourth quarter could lead to struggles in the first half of the following year [12][13] - Mega caps, particularly Nvidia with a 45 trillion market cap, are still involved in driving market performance [13] - Global markets, including Japan, China, Europe, and Latin America, are generally performing well, indicating broad market participation [14][15] Healthcare Sector Analysis - Healthcare sector's recent activity appears idiosyncratic rather than broadly defensive, with pharma showing weakness despite some recent gains [8][9][10] - Biotech has been improving for months, likely driven by lower rates, while equipment and services within healthcare remain poor [9][10]