Powell Just Rang The Alarm for Market Sell-off!Why the Fed's next move could trigger a massive market pullback.
A day after seeing the S&P 500 hitting new all-time highs, we're seeing a pullback. And it could get worse. Why? The Fed is laying the groundwork for immediate rate cuts. Yesterday, Powell sounded like he's seen the whites of a recession's eyes. The market’s recent gains are like a donkey chasing a carrot on a stick. Once the carrot is caught, the game stops. And that's what's happening. The Fed could cut rates in September, as indicated by the CME's Fedwatch Tool, which rose from 45% a month ago to 80% today. Wall Street loves when rate cuts are 60-90 days away. Now, with Powell hinting at a cut, that September date is just 69 days away. For months, Wall Street and talking heads have been pushing the idea of a Goldilocks economy and a soft landing. This has fueled the tremendous move higher in the S&P 500 and Nasdaq indexes over the last eight months. The rally has been driven by higher inflation, a strong labor market, and economic growth, allowing the Fed to focus on bringing down inflation at a steady pace. But Powell’s recent comments change everything. He said the quiet part out loud – that rate cuts are coming for reasons other than inflation. Not because inflation is under control, but because the economy is starting to falter. This is a major shift from the narrative we've been hearing. If there’s more upside in this market, it’s not going to come from the Fed. That leaves traders and investors with a critical question: If there's more upside that’s not from the Fed, where will it come from? Tomorrow’s key economic data will be crucial. If signs of a recession emerge, markets could sell off hard. The Fed’s shift from patient to proactive could mean we’re in for a rough ride. The market has continuously shrugged off negative economic data because it was focused on possible rate cuts. It feels like we're one more negative economic headline away from a massive pullback. Stay alert and watch the economic data closely. This market could turn on a dime. Trade smart, Josh Belanger You’re currently a free subscriber. Upgrade for the full experience and receive exclusive special reports like "How to Get Rich in The Stock Market" and "Congress' Secret Stock Playbook: The Top 5 Power Picks Revealed”.
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Kamis, 11 Juli 2024
Powell Just Rang The Alarm for Market Sell-off!
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