"There's much more to the game of stock speculation than to play for fluctuations of a few points.
It takes a man a long time to learn all the lessons of all his mistakes. They say there are two sides to everything, but there is only one side to the stock market; and it is not the bull side or the bear side, but the right side. It took me longer to get that general principal fixed firmly in my mind than it did most of the more technical phases of the game of stock speculation."
Jesse Livermore
Yes, there is a bubble out there! How do I know that? Well, think about it; if indeed the economy is as good as even Fed chair Powell suggested yesterday, why on Earth would they even dream of lowering interest rates, and why would they commit to not raising them till they see the whites of inflation's eyes virtually pressing against the ends of their noses, if not the back of its head as it races right past them? There has to be something that has the Fed exceedingly concerned if they feel they have to stimulate an already humming economy.
The market, after a bit of hemming and hawing, traded higher on this "Fed day". You might think it was the quarter-point rate cut that did the trick, but of course we knew that was coming, and the market actually traded lower on the announcement itself. What traders saw as a green light to buy was Powell's comment that there'll be no rate increases until inflation rises "significantly".
I agree with Kevin Muir, strategist with East West Investment Management, in a recent Real Vision interview with regard to the real-world efficacy of yet more monetary stimulus (which is on its way a little later today):
While I'll no doubt have more to offer by way of commentary on this morning's Q3 GDP report, in a nutshell 1.9% growth is better than the 1.6% economists had forecast, and we can thank ourselves, us consumers, for keeping the economy afloat (although Uncle Sam did pitch in as well):
The S&P 500 just dropped 8 pts in a matter of seconds on the following:
Consumers are beginning to fret a bit about the future (recessions in grey):
Just another friendly reminder of why we're treading cautiously for now on our clients' behalf.
