Today the FOMC concludes its two day meeting and at 2pm the market will get a better idea if the FED is indeed going to cut interest rates. Will it be at today? That would be somewhat of a shocker.
Just a month ago, according to the market, there was a 90% chance that there would be no change in interest rate policy. Today its only a 75% chance, with the market hiking odds for a rate cut from 10% to 25%.
The odds for a rate cut jump dramatically heading into the July meeting, with the market saying there is an almost 81% chance that the FED Funds rate will be at least .25% lower by then.
The market is saying interest rate cuts are coming, today we should get a lot more clarity as far as when and how much.
The S&P500 comes into this FED day mere percentage points away from fresh record highs. I see some using this as an excuse as to why the FED won't hike rates. The stock market is not the economy!
There are clear signs of a deceleration, and with inflation still stubbornly low, the FED can attempt to avert a slowdown now, without worrying about inflation... at least for the foreseeable future.
No matter how you cut it, this market has been all about cheap money. And as long as the money remains cheap, the stock market will head higher.
Some are saying that a rate cut by the FED will signal the end to this bull market
Ironically those same people were saying rate hikes were going to signal the end to this bull market.
Frankly a rate cut, in my humble opinion, means this market is setting up for its next leg HIGHER. And while being decidedly bearish the last 10 years might get you frequent appearances on your favorite financial news network, it has been the WRONG perspective to have on this stock market.
Those bears who continue to blame the FED for everything no matter what they do or say, also think those who are bullish on this market agree with the FED and their policies. I have NEVER agreed with the FED. Never. They have taken away from the savers and rewarded the risk takers. In 2012.... 7+ years ago I wrote this....
and its just as true today as it was back then.....
It's the new normal. You can whine, bitch, and complain about it, or embrace it. The choice is yours.
Until interest rates rise in a meaningful way, this stock market will continue to defy any and all who think its going to crash. We are in unprecedented and historic times. The Central Banks opened the Pandora's Box in 2008/2009. And it's still not too late to embrace it...