Are Traders Wrong In How They Expect Markets Will React To Today's Rate Cut

Heading into today's 2pm Fed announcement, conventional wisdom is binary: if the Fed cuts 25bps, it will be ugly for risk assets (which have already priced in as much as 70% odds of a 50bps rate cut), and if the Fed cuts 50bps instead, it will be - for lack of a better word - good, and risk (i.e., stocks, bonds, gold, commodities, etc) will shoot higher.

But what is conventional wisdom, as so often happens, is dead wrong?

That is the argument of one of Goldman's top derivatives trades, Brian Garrett, who - in somewhat cautious response to an earlier take from Goldman's global head of trading Jeff Schiffrin (who said a 50bps cut is coming, disagreeing with Goldman's chief economist Jan Hatzius who still sees 25bps, and which is available here), laid out the following thoughts on how the market will react: