Friends
In the past we have talked about how interest rates might rise for good reasons or bad reasons. The same can be said for the reverse. Interest rates have begun to move lower recently, and the question is, is it for good reasons or bad? Good reasons would be that inflation has indeed been tamed and the Fed can now lower interest rates closer to the inflation rate. A bad reason for falling interest rates would be that the economy is collapsing, and deflation is setting in (demand disappears and prices plummet). Today, we got a narrative emphasizing the former. A Fed official hinted that the Fed could lower interest rates at some point because the inflation battle is being won. If that battle can actually be won without ever seeing the economy fall into recession, then the “soft landing” will have been achieved. Actually, there would be no landing at all. All of this would give justification to stock market’s recent move higher and send the bears back into hibernation. Of course, we will see.
As for today, by the close the Dow Jones Industrial Average was up 83 points to finish the day at 35,416. The S&P 500 was up 4 points to close at 4,554. The Nasdaq Composite Index was 40 points to close at 14,281. Gold was up $29 to trade at $2,041 per ounce, while oil was up $1.50 to trade at $76.36 per barrel WTI.
The next Fed FOMC meeting is December 12-13th, and it is likely that they will hold rates where they are for now. Market pundits, whether bullish or bearish seem to feel that stocks have a pretty clear runway until year end. I prefer climbing a wall of worry but whatever the case we’ll keep you informed.
Have a nice evening everyone.
