The global markets recently experienced a three-day sell-off, triggering speculation about the Federal Reserve's next move. Industry experts are divided on whether the central bank will implement an intermeeting interest rate cut at its September meeting. David Rosenberg, founder and president of Rosenberg Research, shares his perspective on the matter in an interview with Market Domination.

While some economists argue in favor of an intermeeting cut, Rosenberg believes these calls are merely a "knee-jerk reaction" to Monday's market movement. According to him, for the Federal Reserve to seriously consider such a cut, the stock market would need to continue plummeting or face a credit market freeze-up.

Rosenberg highlights that the central bank is unlikely to make a sudden policy change solely based on one day's equity market performance. Instead, he expects the Fed to implement a 25 or 50-basis-point cut at the September meeting. Looking ahead, Rosenberg predicts the funds rate to fall between 175 and 275 by August 2025.

For investors navigating the current market pullback, Rosenberg presents an important question: "Do you want to pay to take on equity risk or get paid to take on equity risk?" He emphasizes the significance of the equity risk premium, which indicates the difference between the earnings yield and stock market performance, as well as the yield available from ten-year Treasury notes.

While the equity risk premium has increased during this corrective phase, with bond yields decreasing, Rosenberg suggests that it is still around 100 basis points, significantly lower than the long-run mean of approximately 300 basis points. He expresses his reservation based on this analysis.

Allianz Chief Economic Advisor Mohamed El-Erian goes further to characterize an intermeeting rate cut as a sign of "total panic" that could potentially alarm markets. The differing perspectives from market experts indicate the uncertainty surrounding the Fed's decision-making process.

As investors eagerly await the upcoming September meeting, the market continues to experience fluctuations. To access more expert insights and stay updated on the latest market developments, viewers can watch the full episode of Market Domination.

In the end, it remains to be seen how the Federal Reserve will navigate these uncertain times and address the concerns of investors. The potential impact of an interest rate cut and the broader implications for the global economy will undoubtedly shape the future direction of the markets.