Friends
If you weren’t yet convinced that stocks are moving simply based on expectations that the Fed is going to begin to cut interest rates as soon as the July FOMC meeting, then today’s action should be all you need to see the light. Late in the morning St. Louis Fed President James Bullard indicated that a 50 basis point cut is likely not necessary in July (I can’t believe many thought it was), and then later Fed Chair Powell remarked in a speech that the Fed should not overreact to circumstances that arise. Well, that’s simply not good for market participants that worship at the altar of easy money. They want massive rate cuts, and they want them soon-reasons be damned.
Anyway, by the close the Dow Jones Industrial Average was down 179 points to finish the day at 26,548. The S&P 500 was down 27 points to close at 2,917. Gold continued to climb up $8 to trade at $1,426 per ounce, while oil was down $.04 to trade at $57.86 per barrel WTI.
It is still very likely that the FOMC will cut the Fed Funds rates a quarter of a point in July, but the idea that the market throws a tantrum because they wanted more and faster is really kind of ridiculous. As we always say, we prefer bull markets that are built on economic strength and earnings growth, but we are aware of the world we live in now. Bull markets are now built on weak economic data and accommodative central banks. Good grief.
Have a nice evening everyone.
