With the global markets awaiting the Fed decision tomorrow, one of the greats in the business sent King World News a fantastic piece discussing the wild trading in China and what to expect from the Fed, plus a bonus Q&A that includes questions on gold and the Fed.
China was 5% higher last night, aided by a last-minute burst of buying (no doubt by the government). Europe gained a bit of ground, but the market here spent the first half of the day flopping around unchanged as folks prepare themselves for tomorrow’s FOMC announcement, and in all likelihood a “nothing done” from that tragically clueless band of central planners…
The indices popped about 0.75% in the afternoon and closed on the highs again. Away from stocks, green paper was weaker, fixed income was flattish, oil gained 5%, and the metals were firmer as well, led by silver, which added 3% to gold’s 1%. The miners were also fairly strong.
If They Hike, Things Are Good, If They Don’t, Even Better
There is not much point talking about today’s action because what really matters is how the market responds to the Fed’s verbiage tomorrow. I think a lot of people are expecting the market to rally if the Fed doesn’t hike rates. While we could see such a kneejerk response, people who believe that don’t seem to understand that the lack of a small tightening is not the same thing as QE, which we haven’t seen in a year, and is the reason the market is struggling.
As far as I am concerned, we can’t get the Fed’s bloviating out of the way soon enough so we can focus on whether the market can deal with sky-high expectations at the exact moment when they are unlikely to be met, and there is no cavalry (i.e., easy money) riding to the rescue.
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