Excerpt from Louis Navellier's Marketmail - 12/26/2018
Stocks rebounded only briefly last Tuesday and intraday Wednesday, until a shocking Federal Open Market Committee (FOMC) statement derailed the overall stock market and resulted in high-volume “capitulation” selling to set new annual lows on three consecutive days last week, but if you look at a chart of each index, it is evident that all three major indices initially “retested” on light trading volume on Monday and then subsequently on higher trading volume on Wednesday, Thursday and Friday.
Unfortunately, on Wednesday, the FOMC statement was not dovish, as I had anticipated. The Fed not only raised its key interest rate 0.25%, but also signaled two additional key interest rate hikes in 2019. At his press conference, Fed Chairman Jerome Powell did nothing to calm financial markets. Although the Fed lowered its inflation forecast, their forecast was still way too high, ignoring all of the recent commodity price deflation. Here’s a link to my podcast on Wednesday, and yet again on Thursday.
So even though the Fed is providing guidance of higher rates in 2019, Treasury yields were falling in the wake of its FOMC statement. Confused? I cannot say enough how perplexed I am about why the Fed is ignoring obvious market forces and a lack of inflation. It is very odd for Treasury yields to move in the opposite direction of the Fed’s guidance, so I will be rooting for falling market rates to continue to derail the Fed’s intended interest rate hikes in 2019 – since the Fed does not like to invert the yield curve.
We all had a wonderful Christmas break with families, but there’s no getting around the mountains of coal Santa left all over Wall Street and Washington DC. Bryan Perry begins Income Mail by lacerating the Fed for their “bait and switch” double-talk and deceptive language following last week’s FOMC meeting. Gary Alexander follows with harsh words for those citing some mythical “global economic slowdown” for causing this latest panic selloff. Ivan Martchev wonders why others are talking about a coming recession with 3.7% (and falling) unemployment and 3% GDP growth. Jason Bodner takes a much closer look at the machinations of ETF traders and finds some new causes for the recent volatility there. Then, I’ll wrap it up with a call for a some more sanity at the Fed and Wall Street in coming weeks.
No Way to Sugar Coat How the Fed Blew It
By Bryan Perry
The Writing is on “The Wall” (and other charts)
WHAT “Global Growth Slowdown”?
By Gary Alexander
Is the Market Really Fearing a “Great Earnings Slowdown”?
2019 is the Year of a New Economic Expansion Record
By Ivan Martchev
Can the Stock Market Go Down in a Good Economy?
What One Word Would Best Describe This Market?
By Jason Bodner
The Role of ETFs in Creating Selling Panic Loops
A Look Ahead:
Treasury Secretary Steve Mnuchin Goes on the Warpath for Fiscal Sanity
By Louis Navellier
Most Economic Indicators Point Toward Fed Restraint (If They’re Listening)