A trader looks on as a screen shows Federal Reserve Chairman Jerome Powell's news conference after the U.S. Federal Reserve interest rates announcement on the floor of the New York Stock Exchange, July 31, 2019.Markets expected a more aggressive tone from the Federal Reserve and didn't get it.August is the worst month for the Dow and S&P since 1987, according to the Stock Trader's Almanac.
The markets were tilted to an extremely dovish outcome and Powell struggled to deliver that outcome. The markets bear some of the blame: Nothing in the U.S. economic data or comments from Fed officials of late provided strong support for a continuing rate cut narrative. As UBS said after the meeting, "the data won."U.S. economic data remains strong for the most part.
"I think the market will continue to have a very vibrant rotation," Tim Anderson, Managing Director at MND Partners, told me. He noted that four Dow components — MMM, Caterpillar, Boeing, and UnitedHealth — had together been responsible for lowering the Dow Jones Industrial Average by nearly 1,500 points in the last several months as these stocks are well off their recent 52-week highs — yet the Dow is just shy of historic highs.
Weak earnings growth — likely to be 3% this year, according to Goldman Sachs — is not worrying investors much because it is coming a year after a 23% bump from the tax plan, he said."If we need another cut, Powell will give us one," Alec Young, Managing Director, Global Markets Research at FTSE Russell, told me. "It's the bond futures guys that messed up. There's a lot of groupthink among traders.
Trump... Promised a wall that Mexico would pay for. LIE Said trade-wars are easily won. LIE Calls out socialism, but spends Billions subsidizing farmers Said he would cut national debt. Added 4 T$ so far. Said tax cuts would be rev neutral. LIE. Trump is incompetent
Even the Bank of England isn’t cutting rates so why did the Feds? Trump wants to inflate stock prices in order to help his re-election. So he bullied Fed chair Powell into submission. Folks it is a scam.
Fed’s job is not to ensure performance of the stock market and stock market is not the economy.