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Dovish FOMC report rescues stocks from a nasty Wednesday setback

Written By | Mar 20, 2019
dovish FOMC

Peace dove, via CC 0.0, public domain image.

WASHINGTON.  It’s just after 2 p.m. Wednesday afternoon. On Wall Street, stocks, which began the morning trading session drooping badly, have begun to pick up the pace on the positive side. While the Dow was off around 200 points earlier, it’s only off 31+ points as we write this. Meanwhile, the S&P 500 and the tech-heavy NASDAQ, also down earlier, have suddenly broken back into the green zone. The reason: This afternoon’s dovish FOMC report was clearly expected.

About that dovish FOMC report

Said the Fed,

“… the labor market… remains strong but… growth of economic activity has slowed…. Recent indicators point to slower growth of household spending …. On a 12-month basis, overall inflation has declined, largely as a result of lower energy prices; inflation for items other than food and energy remains near 2 percent. On balance, market-based measures of inflation compensation remained low in recent months, and survey-based measures of longer-term inflation expectations are little changed….

“The Committee decided to maintain the target rate for the federal funds rate at 2-1/4 to 2-1/2 percent…. In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes.”

In other words, if interest rates are going up, it’s not going to happen any time in the near future, at least according to the FOMC. That’s apparently all that stocks needed to pull back from the precipice. It doesn’t guarantee a positive close, however, as stocks still look like they’d at least like to take a rest for awhile. This dovish FOMC report will likely keep things calm. At least for the moment.

(UPDATE: FOMC does not foresee raising interest rates at all in 2019. Bank, financial stocks plummet on the news. But the news is likely very good indeed for businesses and homebuyers this year.)

US-China trade spat continues

On the other hand, still perturbing to Mr Market are the off-and-on rumors we continue to see concerning the possible outcome and/or direction of US-China trade negotiations, dovish FOMC report to the contrary. Given the Chicoms’ relentless drive to replace the US as the military and financial Big Cheese by 2025, China and its negotiators have apparently gotten sticky when it comes to tech transfer issues. I.e., they still pretty much want to steal all our tech secrets as a price of doing business in China.

That’s exactly what California’s tech moneybags don’t want. And, ironically, they expect Trump and his negotiators to hold the line on this, even as they prepare to defeat the President in 2020 by throwing all the money they can at the Democrat nominee. Who, CDN writer Eric Golub assures us, will be the very woke Kamala Harris. (We don’t disagree.)

At any rate, it looks like April will now be when we learn in a more concrete way how those trade negotiations are going. (Maybe.)

Mr Market chokes on uncertainty

And it’s that “maybe” that’s apparently causing markets to choke a bit today rather than making a whole-hearted return to 2019’s irrationally exuberant stock market tone. It’s as if today’s dovish FOMC report is getting at least partially canceled by the US-China trade stalemate.

Again, we’re not going to waste time predicting how today’s markets will close. Numerous crosscurrents in the US and world economies make that a fool’s errand at best. But again, looking at charts, Q4 P&Ls, and assorted cups of tea leaves, we have to conclude that markets will need a good bit more certainty before the bull tries to break out once again.

Allergan make another stupid mistake, this time by publicly virtue signaling vs Judge Jeannine

With regard to individual stock issues, even though our far-too-big position in Allergan (trading symbol: AGN) has been improving quite dramatically over the last couple of weeks (except for today), we’re more than a little perturbed that they and a few other advertisers on Fox’s Judge Jeanine show have bailed on the judge at the behest of the usual Media Matters-led PC Police. And a few of the lefty insiders who’ve been slowly infiltrating that network and betraying their regular audience (and the profitability of Fox News).

The judge committed the apparently unpardonable sin of calling out disgraceful U.S. Rep. ilhan Omar (D-Minn.) for her relentless anti-Semitism, torquing off the disgraceful professional left, not to mention CAIR and the usual hate-filled Media Matters goons. Here’s what our favorite cartoonist, A.F. Branco thinks of Judge Jeannine’s sleazy opponents.

dovish FOMC

Cartoon by Branco. Reproduced with permission and by arrangement with Comically Incorrect. (see link above)*

We’ve said it before and we’ll say it again: Major corporations have no business virtue-signaling to please Democrats and the radical left, as exemplified by the Soros-funded Media Matters which has ruthlessly driven these boycotts against conservative Fox News personalities, seeking to get them pulled from the lineup.

The 50 percent or so of real Americans that still support the USA (and probably more) will remember each episode of virtue-signaling and will automatically boycott your products, corporate CEOs. So if you want to lose half your customers, just keep up this useless crap.

Heads up, CEOs: Cut out the virtue-signaling. Leftist pressure groups don’t buy your stuff anyway

Companies need to butt out of political matters and realize that their main customers – people who pay for their stuff – aren’t into the virtue-signaling. Nearly all companies that cave to these ad boycott campaigns to placate the left are only asking for more trouble in the future. That’s because the left is never satisfied. They’ll be after you for something else next week.

Wake up, people. Caving to the left will only set you up for more of the same in the future. And it will hurt your company, and its shareholders as well. How the hell many times to we have to repeat this?

Today’s wrap

Now that we’re feeling better, it’s probably time for us to bail right now as well. Mr Market will do what he’ll do, in spite of today’s dovish FOMC report. So we’ll keep adjusting our portfolios accordingly. We’re still not selling right now. But eternal vigilance is the price we pay for portfolio freedom and profits as well.

And oh, yeah… Happy First Day of Spring. Even if it’s a cold first day.

— Headline image: Peace dove, via CC 0.0, public domain image.


Terry Ponick

Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Senior Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17