"THE MOST IMPORTANT FOMC OF OUR LIFETIME"
$SPY S&P500 is completely flat
Despite some hawkish comments during the Press conference (the "risk management cut"), the Fed now seems more worried about the job market than inflation.
Next job data will be key. Source: zerohedge
As highlighted by Jim Bianco, isn't the "Fed consensus" just an illusion?
See the labels in the dot plot below: one member of the FOMC thinks the Fed is going to HIKE rates this year. One (Stephen Miran) thinks it is going to cut 1.25% this year (5 cuts over two meetings). And see the spread of dots above (from highest to lowest), the FOMC is showing little to no agreement on what they should do. So on one hand there is an 11-1 vote On the other hand they published a wide dot plot... Add to this is Powell using the term "Risk Management" to describe this cut... It could thus be that "Risk Management" cut is a political decision. As Jim Bianco said "he wants to get Trump off his back". Source: Bianco Research
Mystery Trader Makes Record Bet On 50bps Rate Cut Today
The trade took place in the October fed funds, for an amount of 84,000 contracts which is equivalent to $3.5 million per basis point in risk. the price and timing of the trade was consistent with a buyer, potentially indicating a hedge against a half-point rate cut at Wednesday’s policy meeting, given a quarter-point cut is now fully baked into the swaps market. The CME confirmed this was the largest ever block trade in Fed Funds Futures... Source. zerohedge
From the FT article "Switzerland’s US tech ‘whale’"
>>> https://lnkd.in/e5ctdeTq "Switzerland’s conservative Central Bank has quietly become one of the world’s biggest tech investors, amassing a stock portfolio that is equivalent in value to nearly a fifth of the national economy’s annual output. The Swiss National Bank has US equity holdings amounting to $167bn, spread across more than 2,300 positions, according to US Securities and Exchange Commission filings from June. More than $42bn is invested in just five companies, Amazon, Apple, Meta, Microsoft and Nvidia, making it a major Silicon Valley investor. Its stake in Apple alone is worth nearly $10bn and its stake in Nvidia is more than $11bn. Though not a sovereign wealth fund, the SNB’s $855bn balance sheet of assets, including its tech holdings, put it in a similar league as some of the world’s largest state investment vehicles, including those of Singapore and Qatar". Source: FT, IMD
Happy FOMC day.
Stocks: all-time high Home Prices: all-time high Gold: all-time high Money Supply: all-time high National Debt: all-time high CPI Inflation: 4% per year since Jan 2020, 2x the Fed's "target" Time for the Fed to cut rates. Let's get this party started. Source: Trend Spider
Since a 25bps rate cut is fully priced in, the main focus for markets will be whether the median 2025 dot shows 50bp or 75bp of cuts
With little change in the macro forecasts - for now - Bank of America thinks the 2025 median will continue to show 50bp of cuts, even as the distribution of dots moves down. Alternatively, Goldman now expects 75bps of rate cuts this year and another 50 next year. Clearly, it's all a close call for now. The dot plot should then show one more 25bp cut in 2027, although with Powell on his way out in May 2026 all bets are off regarding the longer horizon. The longer-run median is likely to stay at 3.0%. With that in mind, here is what Bank of America thinks the names behind tomorrow's dots will look like. Of particular interest will be the Lisa Cook and Stephen Miran dots. Source: BofA
Senate votes 48-47 to confirm Stephen Miran to Fed board
Source: Kevin Gordon @KevRGordon, Blomberg
