Daily update
Ken Fisher once called the stock market “The Great Humiliator” (TGH) for a reason: It loves to make as many people look as foolish as possible. Today, in mid-to-late December, we are in the midst of the traditional Santa Claus rally season. It would be very TGH for stocks to take a thumping instead of a Santa rally.
Folks who bought into the AI hype late and those who subscribed to the stories of Sell side about possible? Fed rate cuts,are facing the? Emotional roller coaster- a? consequence of misplaced? greed -? FOMC? just showed the mirror to the markets reiterating that message
Fed cut? policy rate 25bp .The ON RRP rate was cut by an additional 5bp, as discussed in November minutes.This technical move will not have a meaningful impact on the overall policy stance, but it underscores? Fed's cautious approach to quantitative tightening.
Powell delivered clearly hawkish message, highlighting that the easing cycle has entered a 'new phase. His? words allude to an economy that's growing fine and doesn’t need Fed “help.” Moreso, rate cut was a "closer call" than people may have envisioned. Apart from Dot plot, What intrigues the market now relates to what comes next...
Anyway? in this era of Fiscal dominance , monetary policy hardly matters - Whatever Fed does , longer end would? gallop higher driven by debt & deficits , least concerned by the? conventional metrics.
Beyond Fed, a macro insight : Globally, the share of countries where mfg PMI index is contracting hit 59% in Nov.To put this differently, the mfg sector is in recession in 21 out of 36 major economies.- no rational for any possible? strength in currencies of? manufacturers of the world No respite for EURUSD & in the same vein, CNY.
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ECB’s Lane: It is prudent to maintain meeting-by-meeting approach.Nov 2024 low at 1.0331 and a break there to set up? 1.0195 0.618% 2022/23 move
Blueskies - Uber hawkish Fed reignites questions about how far China would go to defend CNY. Rest of the Asia could draw their strategies on that basis - for now, it seems unlikely that they would choose to? stand in front of this fright train .
No prizes for guessing that BOE would keep? rates steady today - GBPUSD targets a test of the 1.2475 Nov trend base and then the 1.2446 May low.
As expected , BoJ unchanged - momentum could extend? USDJPY further towards testing the multi-month top, around 156.75 area touched in Nov.
Welcome test for new administration but it seems " all is well " displayed every where - No sign of any imminent change in the policy