Will The Fed's Coming Rate Cuts Lead To Higher Stock Prices? It Depends On Just One Thing

The Fed's shocking dovish pivot on Wednesday - what may have been driven by political considerations as much as financial and economic ones - capped off a frenzied meltup to what was already a November (and part of December) to remember, and sent the Dow Jones to a record high above 37,000 and briefly tipped the Nasdaq into record close territory as well.

But is the Fed admitting thing are bad, and perhaps getting mush worse - and thus in need of a policy pivot on top of the 100+ bps in financial condition easing in the past month - really bullish for stocks? After all, the Fed would not be preparing to cut if the economy was firing on all four cylinders.

It turns out that the answer is very simple, and it all depends on something rather obvious: whether the economy ends in recession or not after all the easing.