So Many Plot Lines
It is in fact a lot of dots.
It’s just a snapshot, as Jerome Powell emphasized during his post-FOMC meeting press conference about what the dot plot portends and the most recent incoming.Reporters, evidently as anxious about a rate cut as investors, traders, and speculators, seemed emboldened too by a cooler-than-expected May Consumer Price Index print.
The major equity indexes gapped up at the open and were mainly higher on the day, though the Dow Jones Industrial Average closed slightly in the red.
Another big day for Apple $AAPL couldn’t overcome weakness in Nike $NKE and Salesforce $CRM, which were both down more than 2 percent.
Visa $V and JPMorgan Chase & Co. $JPM also closed lower, as financials showed further weakness amid rising expectations that “higher for longer” has a visible horizon.
It is just a snapshot. And the Federal Reserve Chair resisted multiple attempts by members of the fourth estate to frame it as some sort of plan.
And with that I’ll suggest the discussion will soon shift to whether the first quarter-point cut will come in November or earlier – more ahead of the election – in September.
“There's little signs of the second inflation wave,” Roche said, and higher interest rates “aren't adding to inflation, you silly gooses.”
As Powell noted multiple times during his presser, he sees the balance of risks as more balanced. He also noted the potential for a collapse in the labor market.
Though the 3.4 percent year-over-year core reading is still too high, it’s reasonable to assume our central bankers understand the implications of their projections.
And we can reasonably assess that the Fed is poised to act on exigent circumstances that threaten economic collapse and will, more probably, cut by 50 basis points this year.
But let’s observe, as Ben Carlson of A Wealth of Common Sense did, that the federal funds rate has been above 5 percent for more than a year.
Inflation was above 5 percent for 21 months straight, but the yield on the 10-year US Treasury note never got that high.
“The bond market never believed high inflation was here to stay,” Carlson concludes. “It was right.”
From Fed-watching to Elon-gazing, so the market turns…
Today we’ll find out whether Tesla $TSLA shareholders really do believe in their CEO, as they’ll vote on what’s now an approximately $50 billion pay package for Elon Musk.
That’s down from approximately $56 billion when Delaware Chancery Court Judge Kathaleen St. Jude McCormick nullified it in January.
The court cited failures to properly disclose details of the pay package to those same TSLA shareholders.
The shareholder vote carries no formal legal weight. But about 45 percent of the voters are retail investors, regular people, and their interest could create some interesting price action.
There’s that, and there’s the further digestion of the FOMC’s latest non-decision decision.
It’s not as big as Wednesday was, but, still, be careful out there this Thursday.
