Hi all,
Everyone was waiting for Fed Powell’s speech from Jackson Hole on Friday and the markets seemed happy with what he said. There was a pretty firm confirmation that the Fed will start with an interest rate cut at their September meeting.
The rate and depth of the cuts are still data dependent as Powell always likes to say but right now the CME watch tool has an approximately 1/3 chance of a 0.50% cut with a 2/3 chance of a 0.25% cut.
The rate cut optimism has pushed the market back up to near all-time highs after that brief Japan carry trade sell-off that seems like a distant memory.
We are about to enter one of the traditionally worst market months of the year. The past four Septembers have been negative (-3.92%, -4.76%, -9.34%, -4.87% in the years 2020-24), with ’20 and ’21 dropping after very good Augusts (+7.01%, +2.9%). Just something to keep in mind with SPY and DOW close to their highs.
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The cash % level is high now. Waiting for new opportunities.
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