Doug Ramsey, chief investment officer and portfolio manager at the Leuthold Group, has notably voiced his concerns in commentary shared with MarketWatch.

Ramsey points out that the frothy state of the U.S. stock market makes further rate cuts seem dubious. He references the recent 25-basis-point cut delivered by the Fed last week and notes its unusual timing given the market's performance metrics. The commentary was dated Thursday, indicating it was likely in reaction to this latest rate reduction. With the next Fed meeting set to conclude on December 17, traders are anticipating yet another cut, which Ramsey finds increasingly unjustifiable.

According to Ramsey, the conditions under which the Fed last reduced rates were unprecedented, pointing out that before last week, the Federal Reserve had never cut rates with the S&P 500 showing a 12-month gain exceeding 35%, alongside a forward price-to-earnings ratio of 22. He argues that, given the market’s momentum and current valuation, this impending rate cut could be one of the least justified in recent history.

While economic data on the surface may suggest justification for the cuts, Ramsey concedes that indicators, including the Labor Department's monthly nonfarm payrolls report, support the case for further reductions. However, he warns that a soaring stock market could eventually result in adverse consequences.

Ramsey also criticizes the Fed’s apparent underestimation of the impact "wealthflation" had on consumer prices during the 2021-22 period, suggesting that a similar oversight could occur again. Even though Wednesday's Consumer Price Index report indicated that the inflation rate remained steady in October, Ramsey remains cautious about the broader implications of prolonged rate cuts in the current market environment.