Editor’s Note: I’m gonna talk to you today about why the Fed put a bee in my bonnet. But if you want one great trade that still ignores the Fed but allows you to capitalize on potential volatility in EITHER direction, you really should check out Geof Smith’s two-ticker trade. It’s pretty powerful!
Hey y’all,
There’s a moment in the movie Monty Python and the Holy Grail that I think about often.
They’re narrating a series of events, and after each event they describe, the narrator says “and there was much rejoicing.” Then, the animated characters on screen give a group of half-hearted, perfunctory, lifeless cheers to show how happy they are.
I think about that a lot when I feel like we hear very obvious news but people are supposed to pretend to be excited about it.
Why do I mention that today?
Because today, at his much anticipated and entirely predictable speech in Jackson Hole, Federal Reserve Chairman Jerome Powell finally announced that “the time has come” for the central bank to lower the interest rates.
…
And there was much rejoicing…
Stocks have had a lukewarm reaction to the news, probably because this was already baked into the cake entirely.
But I don’t think these rate cuts have been baked into the cake for a week or two… or even a month…
If you think back to the beginning of the year, wasn’t this always entirely predictable?
The Federal Reserve would play around with the idea of lowering rates until around the election, when political pressures would become serious enough that they had to act. And now they are acting.
It’s not like the economy is suddenly “fixed.”
In fact, in one of the most shocking and under-reported stories in recent memory, the Labor Department announced this week that they had overestimated job growth by more than 800,000 this year!
Must be nice to get to make up your own figures to make yourself sound better, then revise them later and not get called on it or face any serious consequences.
Don’t try that at your day job, folks.
All of this has me fed up with the Fed. And as I’ve said before, it’s not really that I hate the Fed or think Jerome Powell is some kind of puppeteer running our lives. I think it’s a lot less sinister and a lot more banal than that.
But the power we give these folks in the markets is absolutely crazy.
And the financial media has gotten out of control. If Jerome Powell sneezes too hard, they’ll report the next stock market crash is just around the corner.
It’s all a game we play to keep things “interesting…” When the real trading is usually done by ignoring the headlines and focusing on what really matters.
There might be a few great fundamentals traders out there, but I’m so proud of our team here at ProsperityPub and their pretty much unanimous focus on technicals.
Sure, they’re aware of the Fed decision, same as anyone, but it’s not going to change their approach to trading.
And that’s where we should all be!
Speaking of which, if you didn’t catch it today, I got to moderate Jack Carter’s 1pm briefing about his 10 AM Income Project, and in the candid Q&A discussion we had after he was done, he gave a great explanation of why folks shouldn’t care at all about what Powell has to say. It was a lot of fun, and not for the faint of heart.
If you weren’t there live, I’ll share that over on the ProsperityPub Telegram as soon as I can get my hands on the recording (you can join us here — it’s FREE!)
Or you can check back here Monday. I’ll probably still be talking about it.
As for now, put your Powell blinders on and enjoy your weekend. Hope the markets have been your friend this week.
— Stephen Ground
Editor in Chief, ProsperityPub
