HX Weekly: September 15 - September 19, 2025

Hello reader, welcome to the latest issue of HX Weekly!

Each Friday, we bring you a new edition of HX Weekly that includes three distinct sections.

In the first section, Thoughts on the Market, we'll offer insights into current economic and market news.

In the second section, HX Daily Redux, we'll revisit investing concepts, tactics, and more from past issues of HX Daily.

And in the third section, Market Wizard’s Wisdom, we’ll share thoughts, quotes, and theories from the greatest investing minds of all time.

Now, let's dive in!

Thoughts on the Markets

A Smart Step, Not a Surrender: Why the Fed’s Rate Cut Makes Sense

Here at HX Research, we believe the Federal Reserve made the right call this week with its quarter-point rate cut.

While critics argue the move was confusing or politically motivated, we see it as a careful balancing act in a challenging economic moment.

Here’s why we agree with the Fed’s approach—and what we’re watching next.

A Cautious Cut for a Complicated Economy

On Wednesday, the Federal Reserve lowered its benchmark interest rate by 25 basis points, bringing the federal funds rate to a target range of 4.00% to 4.25%.

This marked the first cut since December and came after months of speculation about whether the Fed would act in response to slowing economic data.

Why now?

The U.S. job market is cooling. Monthly job growth has slowed, previous job gains were revised downward, and unemployment has ticked higher.

These warning signs suggest the economy could risk weakening further if rates remain elevated. At the same time, inflation is still sticky, especially as new tariffs from the Trump administration push prices higher for key goods.

Faced with these competing pressures, the Fed had to thread the needle. A large cut might send the wrong signal about inflation. No cut at all might hurt the job market.

Instead, the Fed chose a middle path, a move designed to address downside risks without sparking a credibility crisis.

Testing the Waters, Not Diving In

We see this move as strategic, not reactive. It’s the Fed “testing the waters.”

By lowering rates slightly, it creates space for more cuts if conditions worsen. But not overreacting keeps the door open to pause or reverse course if inflation accelerates again.

This approach reflects smart risk management.

According to Powell, the Fed is moving “meeting by meeting,” staying data-dependent, and trying to be nimble in the face of uncertainty.

Some market watchers hoped for more aggressive easing, but the Fed signaled it would act again if the data warranted it.

In this sense, the Fed's move wasn't about politics or short-term pressure. It was about flexibility. The path forward remains open, and the Fed has made clear that it's not on autopilot.

Standing Up to Political Pressure

It’s no secret that President Trump and some of his newly appointed Fed allies want faster, deeper rate cuts.

Governor Stephen Miran, a recent Trump appointee, even dissented from the Fed’s decision. He argued for a 50-basis-point cut instead of 25. That would have been a dramatic move.

However, Chair Jerome Powell and the majority of the Fed’s board stood firm.

They signaled that the central bank remains independent, thoughtful, and committed to data, not political demands.

This is critical.

Fed independence is one of the cornerstones of U.S. economic stability. If the central bank starts acting like a political tool, markets could lose faith, and inflation expectations could spiral.

Whether you agree with Powell or not, there’s no denying this.

The Fed is acting deliberately, not recklessly. And in a moment when political narratives are swirling, that kind of discipline matters.

Inflation Is Still a Threat

While the job market is showing signs of weakness, the inflation fight is far from over. Consumer prices are still running above the Fed’s 2% target, and new tariffs, particularly those affecting imports from China, are adding fresh pressure.

In that context, a full-scale rate-cutting campaign could backfire.

It could signal to markets that the Fed no longer sees inflation as a priority.

That’s why the 25-basis point move strikes a smart balance. It eases financial conditions without throwing open the floodgates.

The Fed knows it can't "fix" the tariff problem directly. But it can avoid making it worse. That's precisely what this modest cut helps accomplish.

What Comes Next

Markets responded with some confusion after the announcement. Stocks were choppy. Bond yields wavered. Investors weren’t quite sure how to interpret the move.

Is this the start of a larger easing cycle, or a one-and-done move?

The answer is… it depends on the data.

If unemployment keeps rising or inflation fades faster than expected, more rate cuts are likely.

However, if inflation picks up again, the Fed may pause or even tighten again.

What matters now is not just what the Fed said, but how economic data unfolds over the next few weeks.

Jobs, prices, consumer sentiment, and global developments will all influence what happens at the Fed’s October and December meetings.

Our View at HX Research

We believe this was a smart, measured move from a central bank trying to do its job in a challenging environment.

The 25-basis point cut reflects a genuine concern for the weakening job market while respecting the risks of ongoing inflation. It also reinforces the Fed's independence, despite political noise.

At HX Research, we trust that Jerome Powell and his team are acting with the best interests of the U.S. economy in mind.

They are not perfect, but they are far from clueless. They are navigating one of the most complicated economic periods in recent memory, with care and professionalism.

Time will tell how this strategy plays out.

But for now, we believe the Fed deserves credit, not criticism, for doing what it thinks is right.

We’ll continue to monitor the economic data and update you on what it means for your investments.

Until next time…

HX Daily Redux/Market Wizard’s Wisdom

Jerome Powell is NOT an Idiot

To complement our Federal Reserve-related lead piece, we'd like to share a post we first published last September on Federal Reserve Chair Jerome Powell.

Given the much-anticipated rate cut this week, it's worth a fresh read.

This quote got us thinking about what the Fed does for the economy.

We have always been bothered by the strong consensus opinion that the Federal Reserve doesn’t know what it is doing and is constantly wrong.

The first aspect of this opinion that bothers us is how and why the people who express it think they know better.

The most knowledgeable critics have the same background as the Fed Governors. They went to the same schools, share many life experiences, and have many commonalities.

Why would THEY have better insight than these people (the Governors) who have more data and do this full-time with vast teams working with them?

For the rest of us – why on Earth would WE think we know any better?

We don’t have the training, the information, the team, or the experience!

It reminds me of a football fan watching an NFL game and yelling at the coach for a particular call.

I am sure that the fans might be knowledgeable, but to think that they know better than this highly trained and experienced professional who has massive access to information and has studied the situation is ludicrous.

That is what any one of us criticizing the Fed Governors is like in my view…

That analogy also gets me to the quote we share from Powell above.

My belief is that the Fed knows what it is doing and is in the best position to make decisions that will steward our economy's growth and stability.

That does not mean they get every call right, just like a professional football game.

It also doesn’t mean they will WIN every game.

The goal is to get most of the calls right and post a winning season that eventually ends up winning the championship.

This is also a lot like TRADING or INVESTING. You would never expect a money manager to get every single call right.

What you want them to do is do the work, have a sound process, and then make the best decisions possible that ultimately result in your portfolio making money.

During that process, you are likely to lose positions. You may also have months or quarters where you lose money. You could have long streaks of not getting much right because some assumptions you have made are incorrect.

If you are a good trader or money manager, your process evolves, and you adjust to your mistakes.

This is EXACTLY what the Fed does, in my opinion.

They underestimated the magnitude and duration of inflation, so they raised rates. They may have had to do much more than they originally anticipated.

Eventually, though, we reached a point where inflation was under control (now), and growth stayed steady.

To me, the Fed has taken us to the playoffs for the last five years. We survived one of the most traumatic socio-economic events in human history, COVID. We did it without the economy collapsing and with overall social stability.

We have also quickly returned to steady and stable growth with rising incomes.

The Fed has done a tremendous job

in the three decades of my career.

Looking back from the early 1990s to today, we have seen huge progress as an economy, a society, and a stock market.

This isn’t BECAUSE of the Fed but rather because of American capitalism and the growth and stability inherent in our economic and social system. The citizens and companies are the players. They ultimately are responsible for the winning.

The Fed is the coach, though, and they – in unpopular opinion – have done a pretty darn good job of getting us to the championship year after year.

We think Jerome Powell and the rest of the Fed Governors are smart, and we are glad we have them working on our behalf.

We hope that you’ve enjoyed this week’s issue of HX Weekly…

Do you have any thoughts, questions, or feedback? Tell us more in the comment section or at [email protected].