Lil Reese said "Fredo in the cut, that's a scary sight" in Chief Keef's Don't Like song. A cut is any location that's secluded and hard to find. For instance, when a drug deal is going down, it's smart to have some people in the cut, that way, they'll provide extra security without alerting the other party since they'll be hard to see. In the cut is primarily used in hip hop, especially Chicago Drill Music to refer to secluded locations where gangsters hang, waiting for Enemies (opps) and dealing drugs. They do so since they'll typically be out of cop's view and if an opp roll by, by the time they realize there's someone in the cut, it'll be too late.
In the cut is not a term used only in hip hop, for instance, a house that's in a remote location can be described as being in the cut.