Exclamation used to show disapproval or to emphasize failiure, used after the subject has just said or done something incredibly stupid.
Derived from the concept of being "cut" from a team, play, band, class, etc. The implication is that the subject has not demonstrated a satisfactory level of competence. In this way, "you're cut" is similar to "you fail at life" and similar exclamations.
The group from which the subject is "cut" is intentionally left open for interpretation.
(NB: "You're cut" is often accompanied by the "scissors" hand gesture.)
Person A: "Hey guys! I just told Derek about the party next friday."
Person B: "Fuck!"
Person C: "Aw shit."
Person D: "Way to go, Person A. That was supposed to be Derek's suprise party, remember?"
Person A: "Oops."
Person D: "You're cut. You're just cut. You're so cut."