Kick Save, and A Beaut!

I don’t watch the NHL these days, but I heard the playoffs are starting.

  • S&P 500 = +2.99%

  • Nasdaq = +3.19%

  • Russell 2000 = +2.83%

Fed Chair Jay Powell delivered the 2nd option of possible alternatives yesterday, which was suggested here on Monday night. To review, these were the three.

  • Maybe current asset prices (including your house and the cost of cereal) already include the assumption of higher interest rates.

  • Maybe the Fed has seen the jarring equity market losses, and tones it down, comforting holders of risky assets (including real estate).

  • Maybe seeing the balance sheet reduction roadmap will surprise investors. If this is the case, interest rates can move by even more than they have (in either direction). Unsurprisingly, this is the singular reaction that I’ll be watching, closely.

It took the second one, when stating that 0.75% rate hike was not currently being discussed. The market breathed a sigh of ‘relief.’

Candidly, I am not certain that is what was actually said, and guess what? It doesn’t matter what I think, Mr. Market understood it that way.