Strategists warn that the U.S. economy is in a bad state, and interest rate cuts will not help. Consumers are in a recession

Macro strategist Stephanie Pomboy warned that it was a "trap" for markets to celebrate the Fed's dovish turn, arguing that a rate cut would do little, with underlying data showing the US economy is far worse than mainstream media reports.

Chairperson Powell delivered a landmark speech at the Jackson Hole symposium, after which Pomboy asserted that in an era of high government debt, the old tools of central banks are no longer effective, and key indicators point to a deepening economic slowdown.

"I highly doubt it," Mr. Pomboy said.He questioned whether the Federal Reserve's rate cut would bring broad relief to the economy."If you look at the market today, the 10-year Treasury yield is up only seven basis points... that doesn't mean there's going to be a lot of relief."

Markets reacted enthusiastically to Mr. Powell's speech on Friday, in which he abandoned the Fed's 2020 policy framework as "irrelevant" and cited weakness in the labour market as a reason for potential policy changes. Fed funds futures immediately put a 92 per cent chance of a September rate cut, sending the S & P 500 index up more than 60 points and gold challenging $3,380 an ounce.

But Pomboy argues that the celebration is out of touch with reality, pointing to a key, little-known data point as the true measure of economic health.

"My favourite measure of the real strength of the corporate sector is just looking at corporate tax revenues, which is a data point that nobody can tamper with," she says.Corporate tax revenues are now growing at zero year-on-year, so this is an important signal, I don't think anyone will notice. "

Pomboy's analysis paints a picture of a "k-shaped" economy, with large-cap profits masking widespread weakness, noting that while the Seven Golden Flowers had strong earnings, growth for the other 493 companies in the S & P 500 Index was "virtually zero" after accounting for inflation.

While businesses are under pressure, the American consumer is also in deep trouble, and Pomboy believes that the American consumer has been in a long-term slump.

Pomboy said: "I think that sinceSince the epidemic, American consumers, ordinary consumers have been in recessionShe pointed to record delinquency rates on credit cards as strong evidence. "If consumers are so powerful and can afford unlimited price increases, why can't they pay their bills?"

Addressing the unprecedented political pressure on the Federal Reserve, the president signalled his intention to fire Fed Governor Tim Cook. Pomboy argued that this came against a backdrop of more than $37 trillion in US debt, which would bring the US closer to a "fiscal dominance" system in which the independence of the central bank would be secondary to the Treasury's borrowing needs. She noted that US Treasury data showed another month of net bond sales by foreign official institutions, raising a key question about who would finance the US government's deficit.

Looking to the future, Pomboy said she remained "very bullish on precious metals" and saw significant opportunities in the energy sector to advance artificial intelligence. In the current environment, she argued, the stock market "is falling in real terms relative to gold, and gold is the only currency that cannot be devalued."