11/28/2018 12:56 PM
Interest Rates – are the most important thing for the economy and stocks.
The Federal Reserve Board, with control of interest rates – wields HUGE POWER.
“Don’t Fight the Fed” has been a long-term Wall Street saying, for a very valid reason.
Federal Reserve Chairman Jerome Powell
“Interest rates are still accommodative, but we're gradually moving to a place where they will be neutral," Powell added. "We may go past neutral, but, we're a long way from neutral at this point, probably. October 3, 2018
IMPLICATION: More Federal Reserve Board interest rate hikes are coming.
TODAY, November 28, 2018 just 56 days later after the October 3 comment that sent stock markets lower:
Powell says interest rates are "just below" range of estimates for neutral policy.
IMPLICATION: Being 'near neutral' suggests the Federal Reserve Board is nearly done hiking interest rates.
Since Powell’s October 3 comment –
US large-cap stocks dropped 10%
Technology heavy Nasdaq Composite index dropped 14%.
The Dow Jones US Internet Stocks Index dropped 16%
US Dollar index rose 2.48%
The Federal Reserve Board makes it more of a challenge to navigate the stock market, since they are a wild card with policy, and they have so much power.
We will give Chairman Powell a pass this time for the huge flip flop in interest rate policy from “we’re a long way from neutral interest rates” on October 3 to we’re “just below neutral” on November 28 just 56 days later – since he is new on the job – but, no doubt he caused major declines in stock markets around the world with his October 3 remarks.
Today, no doubt, is great news for the economy and the stock market.