E Market Briefing For Thursday, Sept. 27

S&P head-fakes were hilarious as just removal of the ‘accommodation’ sentence from the Fed’s ‘Statement’ should have outlined the era’s shift. It is a transition that’s been going on for many months, but ignored or even a bit fought, by money managers trying to pretend everything’s copacetic.

I’ve done my best to warn of this complacency; including an expectation of the stock market initially reacting favorably (‘relief’ that the rate hike was a done deal), and then selling-off; with more selling during late week action; with of course intervening rebound behavior.

Now the common assessment will be that the Chairman warned ‘assets at a high level were a concern’; but he also dismissed the connection. And it was pretty evident that the rocky behavior was commencing before he said that incidentally. He is trying ‘not to break things’, and tried to remain fairly neutral when it related to politics or trade.  

Chairman Powell did acknowledge the ‘concern’ about tariffs & trade their Reserve Banks are hearing around the Country. So that’s not only obvious but as I wrote extensively about just recently; it’s part of what restrains the expansion of CapEx (Capital Expenditures), or puts corp’s. plans ‘on hold’ pending resolution of both the ‘trade’ sparring; and upcoming Midterms too of course. So it’s an expensive market; but there is an argument for growth in the year ahead ‘if’ we can overcome political roadblocks and ‘trade’. 

Now Powell didn’t talk much about that; but the uncertainty and willingness to adjust depending on ‘what the future holds’, were central to his remarks. 

In sum: known-unknowns, with respect to trade and Midterms, are central to why more than S&P chart patterns matter going forward, with respect to where markets head. Although our bias has been ‘correction’, we allow for a better prospect next year ‘if’ certain things fall inline as outlined.