Mish’s Daily: Post-FOMC – What’s Next?
Mish’s Daily: Post-FOMC – What’s Next?
Written by Michele ‘Mish’ Schneider
SUMMARY OF FED DECISION (Kobeissi Letter)
1. Fed leaves rates unchanged for 7th straight meeting
2. Officials raise 2024 inflation forecast from 2.4% to 2.6%
3. Median forecasts shows just 1 rate cut in 2024
4. Median forecast shows 100 bps of rate cuts in 2025
5. Fed says inflation has eased “but remains elevated”
6. Median 2024 Core PCE inflation estimate up from 2.6% to 2.8%
The bottom line-
- 1. The market remains divided with small caps versus growth stocks
- 2. Gold and silver sold off some from their highs, but closed higher
- 3. We saw more calls for a market top coming soon
- 4. The long bonds (chart) above continue to hold the key on risk off/on
On June 3rd, the Daily covered the long bonds.
Here are the thoughts-answers from June 3rd in bold, answers today in red bold:
Monetary Policy: June FED meeting-When the Fed signals a shift toward lower interest rates, bond prices tend to rise-are they getting ready to do a June cut? They did not cut and may not cut until after the election-that is a good thing for confidence in the economy
Economic Conditions: A moderating economy, dovish central bank discourse, and forecasts for milder GDP growth can all contribute to bond rallies. At the end of this week, we will see the updated non farms payroll number-is unemployment increasing? Jobs number was strong, but nuanced-Fed says economy strong
Inflation Expectations: If inflation remains subdued, bond markets anticipate progress, leading to rallies-PCE last week came in with some areas of inflation subdued. CPI comes in flat-not enough for the Fed to cheer-as not near their target, but they hinted they could lower if inflation falls further
Supply and Demand: When demand for bonds exceeds supply (more buyers than sellers), bond prices rally. China has been selling US bonds-are they done? Seems like China paused-and could go back to selling-yet the demand from recent auctions in the US are better
Hence, the Gordian Knot is yet to be untied (Monday’s Daily).
And the long bonds rallied right to the 50-week moving average and stopped.
If TLT clears, note the Leadership chart. We would be concerned if TLT begins to outperform SPY. For a full dive into commodities and stagflation investing, please join me at the Money Show June 13th at 12:25 PM ET (link below)
Educational purposes only, not official trading advice.
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Mish in the Media
Mario Nawfal Spaces-Post FOMC-lots of content 06-12-24
Stockpick.app Mish does a deep dive into several commodities and how to trade each one with fundamentals and technical-in order to see more of these videos that Mish does weekly, please consider subscribing to the app 06-10-24
Business First AM Mish covers 3 things-the Fed impact, precious metals and one stock pick in defense. 06-11-24
Business First AM Mish covers why big tobacco is circling cannabis regulation 06-05-24
StockChartsTV Mish walks you through the chance of a bigger correction and/or summer rally and what to look for 06-03-24
Schwab Network with Nicole Petallides Mish and Nicole discuss areas to watch after a fabulous first 1/2 of the year. 05-31-24
Coming Up:
June 12th CNBC Asia 9:10 PM ET
June 21 Schwab
June 24 CNA Asia
July 2 Yahoo Finance
July Date TBD Wealth 365
Weekly: Business First AM, stockpick.app
ETF Summary
S&P 500 (SPY) 545 is a good target-but no signs of a reversal yet
Russell 2000 (IWM) Cleared the 50-DMA but needs to hold 201
Dow (DIA) 40k resistance and also an interesting turn to red
Nasdaq (QQQ) All-time highs which still hard to argue with
Regional banks (KRE) Watching the range 45-50 CAREFULLY
Semiconductors (SMH) Unless this breaks 250-strong and on ATHs
Transportation (IYT) 63.80 area now important support with 66-67 the area to clear for health
Biotechnology (IBB) 135 support 140 resistance-big eyes here this week
Retail (XRT) 75-80 trading range to break
iShares iBoxx Hi Yd Cor Bond ETF (HYG) Looks better-yet still in a range until it clears 78
20240613
