Stocks Price Big Rate Cuts, But No Recession: "This Is Completely Contradictory"

By Michael Msika, Bloomberg markets live reporter and strategist

The Fed is about to deliver its first interest-rate cut in five years, yet for stock markets holding near record highs, it could well turn out to be the classic travel-and-arrive setup.

That possibility is weighing on the minds of a lot of investors this week as the Fed gears up to start easing policy. While a cut from the current 5.5% rate will be welcomed by markets, the question is how big that reduction might be. A 25 basis-point move might disappoint some traders, while others could be spooked by a 50 basis-point cut, viewing it as a hint that the Fed is concerned about a darkening economic outlook.