Here is a note from two of the greats on Fed decision day.
Federal Reserve & Interest Rates
June 19 (King World News) – From legend Art Cashin: FOMC Day – Traditionally, there is a so-called “Fed Drift” in the 24 hours before an FOMC announcement. The Fed Drift is an upward drift in the stock market during those 24 hours. It has been documented by the Fed itself. Tuesday’s rally may have swallowed the drift.
We believe that Powell may cite the uncertainty around G-20 and trade talks for delaying any action.
Overnight And Overseas – Most Asian equity markets closed solidly higher, mostly in catch-up to Tuesday’s sharp rally in New York. Tokyo and Hong Kong spiked smartly higher, while Shanghai saw a more moderate advance. India closed with only modest gains.
Paris and Frankfurt are trading fractionally lower. London is trading mildly lower.
Among other assets, Bitcoin is a shade lower, trading just above $9100 Gold and oil are basically flat, as is the euro. Yields are tick, or two, higher.
Consensus – While we expect the Fed to pass this month, there is some risk the President may tweet after they pass. Depending on what he says, it could have a market impact.
Despite the above-mentioned Fed Drift, after the decision, the stock market has closed down on 9 of the last 10 Fed days.
Stick with the drill – stay wary, alert and very, very nimble.”
Boockvar’s note on Fed decision…
Peter Boockvar: “The bottom line with today’s FOMC statement and Powell press conference is whether they confirm the markets expectations for a rate cut (currently at 82%) in July or will we hear more about patience that tries to shift those odds closer to 50%, thus giving the Fed more independence and optionality instead of their current position of being cornered and bullied by the market…
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Coincident with the market rally, Investors Intelligence said Bulls in its survey are back above 50 at 50.5 from 48.1 last week and 42 in the week prior. Bears were little changed at 18.4 vs 18.3 while those expecting a Correction fell to a 5 week low. The Bull/Bear spread of 32.1 from 29.8 brought this comment from II, “spreads above 30% are warning signs while those above 40% call for defensive measures.” I’ll leave it at that.
Also, check out Peter Schiff, Art Cashin And Fred Hickey On The Calm Before The Storm CLICK HERE TO READ.
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