Now What?

During the Fed’s press conference last week, Steve Liesman asked Powell about the Fed potentially cutting interest rates next year. This was his response:

We are seeing, you know, strong growth that appears to be moderating, We’re seeing a labor market that is coming back into balance by so many measures, and we’re seeing inflation making real progress. These are the things we’ve been wanting to see. We can’t know — we still have a ways to go. No one is declaring victory. That would be premature, and we can’t be guaranteed of this progress. So, we’re moving carefully in making that assessment of whether we need to do more or not. And that’s really the question that we’re on, but of course, the other question, the question of when will it become appropriate to begin dialing back the amount of policy restraint in place, that begins to come into view, and is clearly a topic of discussion out in the world and also a discussion for us at our meeting today.

Jerome Powell might not be ready to declare victory, at least not in front of a microphone, but the market spiked the football anyway.

Stocks spent much of November pricing in a different macro environment that reached a crescendo last week.

Leading up to the fed meeting and especially after, everything rallied. The strongest performers are those that are sensitive to interest rates. REITs for example, had its best 37-day change of the last ten years (the market bottomed 37 days ago). Utilities, financials, and consumer discretionary stocks also have seen blistering returns.

The question on everybody’s mind is, what happens next now that the soft landing is consensus? How much of this is already baked into the pie? All we can do is debate until we find out. And that’s part of what makes this the most fun game in the world.

Josh and I got into this and much more on tonight’s What Are Your Thoughts?