Federal Reserve officials are signaling a potential shift in monetary policy, with expectations mounting for interest rate cuts beginning in September. Chicago Fed President Austan Goolsbee indicated that the central bank is closer to easing rates, cautioning that delaying such action could risk a recession. Current market sentiment reflects a 100% probability of a rate cut on September 18, 2024, as investors anticipate at least two cuts before the end of the year. This shift in monetary policy is coinciding with a growing confidence in Donald Trump's potential victory in the upcoming presidential election, prompting a rotation of investments from technology stocks to small-cap equities. Analysts from Bank of America have noted that investors are increasingly favoring U.S. stocks amid these developments, with small-cap stocks gaining traction as a safer investment option. Hedge funds have also increased their bullish bets on gold, reaching a four-year high, reflecting concerns about the election and broader economic conditions. Overall, the market is positioning itself for significant changes influenced by both the Fed's monetary policy and the political landscape leading up to the November election.