What we saw yesterday we Powell blinking. Sort of like Sir Alex Guinness in “Bridge over the River Kwai” when in the end he realizes what he has done:)
Well, maybe not the best of analogies. But you get the point.
The damage has already been done by Powell. He fell way short of what is needed. Putting a halt to hikes for a while is not going to get the job done with all that is happening right now.
Any 1 of a dozen events could trigger a massive shock to the system. It would have helped of Powell would have at least acknowledged this and said they were prepared to take action to flood liquidity into the system if needed.
Helicopter Ben would have had a better press conference. One that inspired a bit more confidence. But, Powell did save the day. One day.
It’s not so much that Powell approach might not be correct, in a time long ago. Its that it conflicts directly with what the White House is trying to accomplish.
Powell is putting a headwind on the economic goals that America needs to not only remain competitive but also to allow it some maneuvering room taking hard positions on Trade.
Tight money works against those. Let alone increasing the cost of repaying the debt. Our genius’ in D.C. has funded the debt on short-term rates, rather than locking in rates for 30 or 40 years to save a few 10ths of a %. And now it is costing them.
The markets this morning are about unchanged. However, Oil is up almost 4%, Financials are up slightly, TLT is down about 1/2% while the Dollar is slightly positive.
To me, this is neutral to slightly positive. However, I have to think the psychology has changed a bit, at least for today:)
I would not be surprised to see a rally today. I added a few longs yesterday, and with the rally, it took me out of any mean reversion trades.
What to watch? The Yellow Vest riots and China’s response to the U.S. actions in Canada.
You will not see these riots in Eastern European countries as they never bought into the globalist agenda. I expect them to increase in Eastern Europe.
The one thing I am surprised however is that there is no indication that Americans are up to protesting. Sure the left protests at the drop of a hat. But they have deep pockets to get things going. On the right, the last thing Republican Billionaires want is a yellow vest riot. Thus, no groundswell for one. Americans are going to have to do it on their own if they want to change.
All these MAGA people and not 1 protest? 53 Million Americans voted for Trump and not 1 protest? Americans have had it too easy. Their complacency is going to cost them. If you think a phone call to your Congressman is going to do the trick, I have a bridge to sell you.
It might come as a surprise, but I am not a political person. Its rarely I get drawn up in the almost futile efforts at complaining about our corrupt political system.
The last time I got this worked up was when the Republicans impeached Clinton. (I was not on the Republicans side on that one) It was that long ago. But now, I see things 10x worse.
And as a swing trader, I have built that into my analysis, the swings that the obvious political dysfunction is having on the markets.
Today I will be looking for some short-term swings. With the Fed out of the way, I would expect some good trading through year-end now. Absent some news shocks of course: ) A big if.
If you want to follow some of my trades along with my thoughts typically given after the open you can go to @rickjswings. Typically I talk about the overall day expected with the markets and also give some levels on the ES and NQ for failed breakout scalping.
It’s my private twitter feed for the stock market and its free. Sports Handicapping is the subscription-based part of this site. But considering the cost of joining it’s almost free:)
Good Luck Today
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