Friends
As expected the Fed raised the Fed Funds rate a quarter of a point with the new range now 1.50% to 1.75%. In their continuing attempt to scale back accommodation, the statement and subsequent testimony from Fed Chair Jerome Powell indicates that there will likely be a couple more rate hikes this year, 3 in 2019 and perhaps 3 more in 2020. At that point the Fed Funds rate would be well over 3% and “normalized” in the Fed’s eyes. Chairman Powell did a good job at his first press conference, as he was quick and to the point, not the wordy blather that we have come to expect from Fed Chairs.
Stocks rallied initially on the move with the Dow peaking up over 200 points. Subsequently, stocks gave up all of those gains, fell into negative territory, tried to rally back but failed at the close. For the day, the Dow Jones Industrial Average was down 44 points to close at 24,682. The S&P 500 was down 5 points to finish the day at 2,711. Gold was up $23 to trade at $1,335 per ounce, while oil was up $1.98 to trade at $65.52 per barrel WTI.
The Fed’s view of the economy is still constructive, inflation is still modest and the outlook is still positive. All in all, the economic outlook is good. Unfortunately, there is so much more to the story and the markets deal with headline risk and uncertainty every day. 2017 was the year of no volatility, 2018 appears it will continue to be the year of plenty of volatility. Let’s see how the rest of the week goes.
Have a nice evening everyone.
