Only two weeks ago Fed Chair Powell said “the FOMC are not thinking about rate cuts”. And it was premature to conclude with confidence they are at a sufficiently restrictive level. Well forget all that. Powell performed one of the more remarkable pivots ever seen from the Fed. He pivoted 180 degrees from his sentiment barely 14 days ago. Powell is now talking three rate cuts next year and the Fed have essentially “won the battle” over inflation. My take is the Fed is now more concerned about the business cycle; i.e., recession. There is a reason the Fed will cut – and that is the risk of dislocation in the economy (i.e., recession)
Ignore the Debt Ceiling Noise
Mainstream media remain fixated on ‘debt ceiling’ negotiations – warning of a “financial catastrophe” if this doesn’t get done. This is the 78th time we have hit the so-called debt ceiling. And how many defaults has there been? Zero. A deal will get done. And if we are presented with a sell-off in markets – then it represents an opportunity.
Classic Bear Market Rip
Stocks are likely to push higher through to the end of the year. It’s what we usually find after mid-term elections. But for now, this feels like another bear market rally… which will likely find resistance around the zone of 4100 on the S&P 500. We are a long way from any Fed “pause or pivot”…
‘Fed Whisperer’ Spurs Market
The rally is on… but how far can it go? I will share my thoughts. And whilst we’re likely to see a short-term shift in sentiment… longer-term headwinds remain.
For a full list of posts from 2017…