Cheap Lawn Chair

Ordered direct from K-mart...The lawn chair that Powell has used and folded himself!  Yeah, he folded like an Ed Lampert owned K-mart lawn chair.

Wow, that was fast.  The Fed gave out some hints, and they were not Wall Street Journal trial balloons.  They were sledge hammers nailing down the dovish message to the financial world.  The rate hiking cycle is over.  Going to neutral at this point with this kind of economy is screaming to the market that the next move is a rate cut, not a rate hike.  The Eurodollars market started to sniff that out at the end of December, and there was disbelief in the fixed income community.  Now there is universal belief that the Fed is done, and the balance sheet contraction will finish this year.

The Fed chairman is now just a cheap suit who is owned and operated by Wall Street.  If Wall Street throws a temper tantrum, the Fed will listen and obey their commands.  Powell tried to act like a tough guy, like he was different, but he's just a lamb in wolf's clothing.  A bull in a bear suit.

The excuses for the quick flip flop without weakening economic data were lame.  1) The narrative around Chinese and European economic weakness.  Narrative?  Is he trying to make monetary policy or write a script for a two bit investment banking analyst?  2) Government shutdown.  Last I checked, the government shutdown is over, and government workers got a free 3 week paid vacation on the taxpayers dime.

This doesn't change my outlook for the SPX.  This current Fed is not the one that's causing the problems.  It is the bubble that was built up over years and years that is ready to pop soon.  Late cycle, over stimulated, overvalued, and no organic growth.  It is going to be a disaster once all the latecomers jump on board the bull train.  Powell's capitulation only speeds up the process in forming a top, as now the bulls have less excuses to not buy.  Once the trade deal rumors start flying around, short 'em all.

The upside in the SPX is mostly over.  There is likely another 1-2% upside after the trade deal rumors come out and that's it.  SPX 2720-2730 would be an exquisite level to short.  Waiting for it.