Wednesday, June 13, 2018

Stock Market Waiting For 2 PM To Spring Higher

The market has had so much good news but it's been on pause waiting for today's Fed decision.

The stock market stopped going down on bad news, has been going up on good news and so now sits like a coiled spring waiting for "nothing bad" at 2 PM.

Yesterday's CPI Hints To Today's Fed Decision

Yesterday's CPI of .2% and last month's .1% ex-food and energy can cause the Fed to hold off from future rate hikes this year after this next expected rate hike later today.

Today's expected Fed Funds rate hike would put them at their 2% target for the year (Search federal funds rate to see their 2018 expectation). Will there be more? Lighter inflation reports of late probably keep them at a wait-and-see. That could mean today's press conference with Chairman Jerome Powell at 2:30 would be bullish for markets.

We also pointed out that the Fed leaks to the Wall Street Journal to prep markets for coming decisions. The Wall Street Journal hinted the Fed is unsure about future hikes later this year.

A pause of the rate hike cadence would likely be taken very bullish for markets.

Already Good News: Coiled Spring Waiting To Jump

A North Korean peace treaty signed this week removes a huge amount of geopolitical risk. It also eases economic tensions in Asia. That could help strengthen trade ties between the US and China. We saw the US lift the ZTE ban and come to an agreement on trade with China.

These are meaningful positives that finally could see their market reaction after 2 PM today.

Earnings Picture Strong

Of the major companies we've spoken to we get the feeling that economic trends are strong. The only earnings period we were concerned about to subscribers in the last year was the Q4 guide in Q1. Earnings did not support stocks. But we were bullish for the Q1 reports and their guide and so far we're very bullish about what to expect for Q2.

Again, there's strong positive news. Sometimes investors just want the Fed day to pass before they buy. I think that's the case here.


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