FED THOUGHTS

–After over 2,500 Dow points in 9 days, markets are bouncing this morning. This is being helped by announced buybacks…BOEING (BA) announced a humongous additional buyback and is up almost 100 Dow points as we write this. Remember, in bearish phases, rallies only serve to undo very stretched. extended and oversold conditions to the downside…and to be clear, we are in another one of those positions. Bearishness has also hit extreme numbers again. Even the original Mr. Bubble, Alan Greenspan is out this morning talking quite bearishly.-

-The Fed announces tomorrow. We were one of the first to state that the next hike would be the last hike. Subsequently, Ben (Jay Powell) Bernanke and other Fedheads talked more “dovishly!” We wanted to add something to that now popular stance. We not only think that at the very least, they are one more and done, but WE NOW WOULD NOT BE SURPRISED IF THEY DID NOT RAISE RATES AT ALL. We say this not because of Trump’s jawboning. We say it because of the markets themselves. Ben (Jay Powell) Bernanke reacts to the markets and we all know what the markets have been doing. On top of that, the long bond is yelling at him to not raise rates as in just the past 6 weeks, 10 year yields have come down from 3.25% to 2.83%. Oil prices have also crashed. Markets, yields and oil prices have simply been screaming slowdown.-

-No matter what, we believe we will be hearing that the “dependent” data is not as bullish as they thought as things have changed. We may also hear something to the effect that if things worsen, they will stand ready with their weapons. (Lower rates and even easier money!) For 10 years, all the central banks have decided markets should not be free and price discovery has to be kicked down the eternal road. As far as markets, all we can tell you is that just about every time central banks have pivoted to easy and easier money, markets have reacted well. As always, we will let the market decide on that but with price still way down, stretched, extended and oversold, wouldn’t bet against a further bounce. It had better!-