Dovish hold, or hawkish cut: that is the question

The last Fed Chair Powell's press conference marked a top in risk sentiment as the infamous words "a December cut is not a foregone conclusion - in fact, far from it" triggered a hawkish repricing in interest rate expectations.The stock market has been drifting lower ever since as the chances for a December cut kept on falling. Depending on the context, a hawkish repricing is generally negative for the stock market, especially when the market is overstretched. The problem now is that the stock market is what could break the economy, so the Fed will need to walk a fine line to avoid a recession. In fact, with this latest selloff, the total easing by the end of 2026 has actually increased a little. This is because the market is thinking that a continuous selloff in the stock market is going to weigh a lot on sentiment and economic activity, and eventually require more or more aggressive rate cuts. If you consider the K-shaped economy narrative, you can see how the upper part depends on the stock market. This is why I think that if the Fed is going to hold rates steady, it's going to do so by delivering a dovish hold. The December meeting will come with fresh economic projections and the Fed could signal a more dovish future outlook by increasing the projected rate cuts in 2026 from 1 to 2 or even 3. This leads me to expect a trough in the bearish risk sentiment here as from an asymmetric view, I think the downside is now limited and we could see a rebound (famous last words).