Thursday, September 22, 2016

Fed Excuses

We got your typical positive Fed day yesterday on the FOMC punt till December.  After all, they say they are not political so it must not be because of the election.  But everyone that is a realist and not a buyer of the media hype knows that the Fed is not raising rates because of the election in November.  Nothing more, nothing less.  If it wasn't about the election, then they would be hiking already considering their "strengthening" case for raising rates.

The market ate it up.  It loves to see the Fed chicken out and it responded promptly with a quick spike and has basically gone straight up since.  It is unusual to see such a big gap up after a Fed rally day on expected non-hiking news but this market seems to always surprise on the upside.  Once again, I am surprised to see this market already blast through 2160 like it was just a tiny speed bump.

Now everyone who is underexposed to equities have to play catch up and need to buy for fear of missing another post-Brexit type rally.  Memories are short, but the crowd remembers being fooled by a scary dip only to see it reverse higher even faster.

I figured the market would be a bit more cautious about rallying into the presidential elections with Trump doing better in the polls but the fear of being left behind again is greater than the fear of a possible Trump presidency.  We got bonds screaming higher as well, and that usually means this thing is not going down today.  This central bank dependent stock market loves a strong bond market.  With 2160 being blasted to smithereens and with this screaming bond market, I will refrain from shorting this until we hit new all time highs.


Anonymous said...

Trendrambo: Sneaky bastids' stagflating by adding 250 bill to M1 annually. No choice for market but up. Rate drama is just sideshow.

Market Owl said...

CPI is above 2% and unemplyment rate below 5%. Yet they don't raise rates. They have no choice but to stagflate this POS economy. Without it, crap hits the fan and Trump becomes President.