November Fed Meeting

On November 1st, the Fed maintained rates and, as Mr. Powell does, he left the possibility of another rate hike on the table. One could argue the market called its bluff as the three major indices all finished higher the day following the announcement.

The goal of the Federal Reserve is to tackle inflation and stop it from increasing. Inflation peaked in June 2022 with a print of 9.1%. The last CPI report came in at 3.7% (September). The Fed has a seemingly arbitrary goal of keeping inflation at 2%. In my opinion, the inflation rate has significantly decreased, and the Fed has accomplished its goal of tackling inflation.

To answer the question: What the Fed will do? I subscribe to the conclusion of the yield curve. The Yield Curve depicts that the Fed Funds rate will stay constant in the short term with a possible rate cut a year from now. This gives me a bearish viewpoint, from the notion that consumers can beat inflation by putting their money in money market accounts with minimal risk. However, as an optimist, it is always good to have money in the market but rather cautious about all the stocks that are lifting the indices, especially semiconductors.

Currently, the S&P is sitting at its 200-day moving average, a price level where a lot of trading occurs. The S&P broke the 200-day moving average two weeks ago but has rebounded. Apple reports tomorrow, which will undoubtedly move the market and, more specifically, the S&P 500 above or below the 200-day moving average. Ironic big technical levels are reached on the horizon of a major catalyst.