It's been several weeks of grazing upon some nasty 2015-esque consolidation since the Monday market crash, and the bulls had the energy heading into this afternoons FED decision. Those peculiar spikes to the upside earlier this week made a lot more sense later today... at least for a little while.
When the $SPY was defended at $195, then $196 and today at $200.... the buyers were spot on. The FED came out and told the world, the IMF, the emerging markets, anyone looking to repay or take on more debt, exactly what they wanted to hear. No policy change. And if you listened to Janet Yellen, in between all the ummms and ahhhs she managed to come across as if rates weren't going to rise anytime soon.
One question she addressed even asked if rates will ever rise again. Yellen, in reply, stated she could not rule that out, even if it was something she didn't expect. That, to me, was shocking. I joke about the fact interest rates haven't been hiked since the industrial revolution, but the FED chairwoman left open the chance that rates will remain at zero forever.... forever? Wow.
Prior to the FED decision a response to one of my tweets was as follows:
Now we don't know for sure if Wicomar is 80 or 40 or 20. But the point is something that sticks. Today, amid all this talk about a rate hike, we learned that we are farther away from a hike than we were just months ago. I'd argue that we are closer to negative rates than we are of a rate hike. And while the Yellen press conference brought up the topic of negative rates, it was not something they spoke about at length.
Right now, after 7+ years of unprecedented stimulus, easing, Central bank accommodation, it is becoming more apparent that normalcy and Central Bank policy are two terms that may never again be spoken in the same sentence.
The initial reaction to a lifetime of zero rate policy was initially bullish. A few weeks of grazing the cheap stock field had the bulls ready to run. Later in the day Yellen ummmed and ahhhed the bulls back into the pen.
I don't think the FED lost credibility today, as many though they would by not raising rates. I think it speaks more about how deep the hole the FED has dug the last 7 years.
It's so dark in that hole, that the FED doesn't know when the heck its going to see the light.
It's ironic, as I was looking for a rate hike just to get all the rate hike talk off the table. Today, despite no rate hike, I think we did get the rate hike talk off the.... ummmmm....ahh.....emmmm... table.
So we have that..... ummmmm.....ahhhh...going for us which is.... ummmm .... ahhhh... nice.