After global markets faced a three-day sell-off, all eyes are on the Federal Reserve to initiate an interest rate cut at its September meeting. Rosenberg Research founder and president David Rosenberg joins Market Domination to discuss the Fed's next moves and how investors can navigate the current market.

While many economists point to the possibility of an inter-meeting cut by the Fed, Rosenberg believes those calls are a "knee-jerk reaction" to the market movement on Monday. For the Fed to truly consider an inter-meeting cut, he believes the stock market needs to continue its freefall or experience a freeze-up in credit markets.

"They were not going to move intermeeting just based on what happened on one day with the equity market," Rosenberg says, believing that at its September policy meeting, the Fed will initiate either a 25 or 50-basis-point cut and that the funds rate should fall between 175 and 275 by August 2025.

For equity investors (^DJI, ^IXIC, ^GSPC) navigating the pullback, Rosenberg asks, "Do you want to pay to take on equity risk or get paid to take on equity risk?"

"I respect something called math. In other words, the equity risk premium, the spread between the earnings yield and the stock market, and the yield that you can get in the ten-year Treasury note (^TYX, ^TNX, ^FVX). And the equity risk premium, it has gone up during this corrective phase and bond yields coming down, but it's still around 100 basis points. Where's the long-run mean? Closer to 300 basis points. So I still don't like the math."

On Monday, Allianz Chief Economic Advisor Mohamed El-Erian went as far as to characterize an intermeeting cut to Yahoo Finance as signaling "total panic" that could scare markets.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

This post was written by Melanie Riehl