Fed Odyssey - August
Plus: Nvidia vs Apple, Election Volatility Playbook Update
Happy August! July was kind to us, lets see what August brings. Firstly, a review of yesterday’s Fed meeting:
Powell was dovish, as expected. After all, the Fed desperately wants to cut rates. Dual mandate, innit?
I was more surprised when JPow said that a 50bps cut wasn’t on the agenda. In his words: “That’s not something we’re thinking about right now. Of course, we haven’t made any decisions at all.”
In “Tamagotchi’s Last Stand” we flagged this as a possibility for a dovish surprise, given that the probability of a rate cut for the September meeting was at 107% (i.e. 100% probability for 25bps, and 7% probability for 50bps). However, just after the Fed meeting concluded, the probability for a 50bps rate cut in September increased from 107% to 114.9%!
The Jobs Report on Friday will be interesting…Once again the Policy Maker Conundrum is in play, as summarized in the Meme below:
Do “they” massage the data to make Wall Street happy, or do “they” massage the data to make Biden / Kamala happy? Decisions Decisions Decisions!*
*P.S. If you want to understand why I refer to them as “fake” data, please read “Bad = Good = Nonsense = Alert” for a deep dive into the previous Jobs report.
10% of the S&P and 14% of the Nasdaq Report Tonight!
We kick off the month of August with a very busy day of earnings as 10.5% of the S&P and 14% of the Nasdaq report after the market close!
Just kidding, it’s only Apple and Amazon reporting! Check out the picture below from “Nvidia Liquidity Vortex”:
I guess that’s one good thing about a Market dominated by a handful of stocks. The monkeys only have to read a handful of results a quarter. Maybe the Market concentration in a few stocks was Nature’s way to ensure that the monkey brains don’t explode from information overload…
Nvidia vs Apple
While everyone has been busy analysing the Fed, something else has been bugging me…an eerie resemblance of a sideshow in the June 12th and July 31st Fed Meetings. Maybe it’s nothing. Maybe it’s one those things that should get filed under “Things that none cares about, except a shrub”. But anyway. Here it goes: