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The US Stock Markets have been dropping because the FED won’t relent and is targeting more rate hikes this year.
Now we get a very strong US Jobs report …which obviously validates the FEDs stance to continue the rate hikes
And we get a 4% rally in US Markets.
Did someone think this through ?
I know your ques. is a bit tongue in cheek. Personally,I don’t understand people so that’s my usual explanation. On a more serious not though, I suppose the pressure on wages are inflationary. Combine that with the pending commodity and PM inflation that is starting(?), and it would probably be correct to predict the equity markets will try to keep up with that inflation. So even though there are interest rate increases threatened which provide a headwind, the inflation tail wind propels the mkt. up. It’s a theory anyway.
I believe gold was rising and the stock market falling because the odds of rate hikes this year were falling. Now the jobs data has thrown that into doubt, so the immediate reaction is for both to reverse. It’s all crap of course – the Fed is boxed in and we are close to the end of the rate hike cycle. That is one reason why I’m very bullish on gold and the miners for 2019.
powell came out and said rate increases on hold for a while,
“With the muted inflation readings that we’ve seen coming in, we will be patient as we watch to see how the economy evolves,” Mr. Powell said. The Fed predicted in December that it would raise rates twice in 2019, but Mr. Powell said the central bank was ready to change course “significantly if necessary.”
I missed that Highroller.
So the economy is heating up ( Jobs creation is great..unemployment low but they can’t raise rates because it scares the stock market.
Anyhow….who knows what Monday will bring.
I’d say lotsa whipsaw until we get divergent low , dang thing acting like natty gas. Monday a panic day says Armstrong so whip up or down , who knows but thinking the Nancy Pelosi and her new gang of housewives will hurt confidence in usa.
Woohoo…I love a good panic day
🙂
Thanks for the info HR, I am set up short on the S&P as of Friday so I hope that volatility is to the downside as I am looking for a decline into the Jan 20th time frame coinciding with the full moon. Can you tell me where you got the information that Armstrong has a panic cycle for Monday? In these high volatility markets that is perfect for setting up a straddle. TIA
I think gold knows that rate hikes are coming to an end. Maybe on or two more at the most in my view. We might not even get that. it’s simple mathematics. If rates rise much more, debt repayments will kill the US (unless the debt is inflated away).