What’s to run on FOMC
|S&P 500 rose on Sep 50bp cut boost to 2/3 odds – to the neckline of Sunday discussed inverted H&S. Knocking on the declining trendline connecting Jul and Aug tops. It didn‘t matter that most of semis looked weak – financials to the daily rescue, alongside cyclicals, interest rate sensitive plays, and last but not least – oil stocks living up to my latest premium call of being well worth watching for bottoming and turning around.
What does the continued resilience in precious metals (copper slowly joining) and USD a bit declining tell us about the FOMC positioning? Will we get the reassuring 25bp cut that I had been a fan of, or is the new favorite of 50bp the reassuring one (no asleep at the wheel) now? Given what I see happening in various sectors and even individual names, I have an answer below for clients.
As the yen keeps going sideways this week, it‘s well worth looking to EURUSD and DAX. VIX tried to rise, but was rejected yesterday, while the put to call ratio is just so, so complacent (still good enough for some intraday gains earlier today though).
Who has it right, who will be disappointed? Plenty of dovish expectations are built into tomorrow already, so a decent sectoral review helps determine what would have easiest time moving in the conference aftermath – once again, I‘m looking to real assets and forex for clues as well.
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