Quick Take: What The “Cacophony” Of Fedspeak Tells Us?

The Fed’s next move remains the focal point in the markets on this fine Friday morning.

With what Bloomberg called a “cacophony” of Fedspeak this week and both Yellen and Fischer stepping to the microphone today, the issue of when the FOMC will hike rates again is still center ring. Given the recent comments and what can only be deemed capitulation by some hitherto uber-dovish Fed officials (Exhibits A and B here are Fed Governor Lael Brainard and NY Fed’s Dudley), the futures are now pricing in an 80-90% probability of a rate hike at the March 15 Fed meeting. And make no mistake about it; today’s speeches will either confirm this view or put uncertainty back into the mix.

On the stock market front, I caught a pretty strong whiff of program selling yesterday afternoon – something we haven’t seen for some time, actually! And given the massive gap on the charts, we would not be surprised to see the bears take a shot, right here, right now.

However, we don’t expect to see our furry friends succeed to any great degree (we think filling the gap and testing support at 2350 is the likely outcome of the bear assault) and anything more than a “pause that refreshes” would be surprising.

For me, the bottom line is the dip buyers will likely emerge again after a couple down days – so be watching for that. At this point, the song remains the same – buy the dips.

Thought For The Day:

Remember, there is no “I” in team!

Current Market Drivers

We strive to identify the driving forces behind the market action on a daily basis. The thinking is that if we can both identify and understand why stocks are doing what they are doing on a short-term basis; we are not likely to be surprised/blind-sided by a big move. Listed below are what we believe to be the driving forces of the current market (Listed in order of importance).

    1. The State of Trump Administration Policies