WASHINGTON. We bring back our “Waiting for Godot” headline motif today, as we await the Fed’s latest pronouncements on interest rates. Will they cut them? Will they cut them now? Or will they likely wait until July, but make us sort of happy by cutting the word “patient” out of their upcoming communiqué. Those Fed minutes are due out today, Wednesday, at 2 p.m. ET, BTW.
Re: Those Fed Minutes – What do “they” already know?
I’m writing this hopefully brief column at around 1:30 p.m. ET and looking for signs that “they” — meaning Wall Street insiders, assorted rich people, wealthy Democrats and the famed but highly secretive Gnomes of Zurich – already know what’s in the Fed’s latest Delphic prophecy. They always do. And it’s around this time they start tipping their collective hand. As for us, well, that’s why we’re hanging around like Samuel Beckett play fans, “Waiting for Godot.” Of course, as Beckett fans already know, Godot never shows. Maybe Tuesday’s Rally, Part II, won’t show up either. It all depends on those Fed minutes.
Right now, unfortunately, the Dow, the S&P 500 and the NASDAQ are all roughly flatline. The Dow is making a valiant attempt to stay above the zero line and in the green zone. But the other averages seem comfortable in the red zone, but only slightly below the zero point. I.e., the averages at the moment hover ± 0.05 around the flatline. That’s a weird “tell.”
Markets had a big party yesterday, Tuesday, with the bulls absolutely convinced the Fed would cut interest rates right away by 0.25 – 0.50 percent. Prognosticators with a more pragmatic bent hedged, saying the Fed would do this, but not until after their July meeting. But they’d signal this by taking the word “patient” out of the public version of their latest meeting minutes, the ones due at 2.
Our bumbling Federal Reserve
Who knows what’s going to happen, really? The Fed should have never jacked up interest rates so fast last fall to begin with. But President Trump has likely pissed them off by carefully explaining to the public – in colorful language, no less – just how damned dumb these egghead bankers really are. Since members of the Fed are more or less their own subchapter of the Deep State, that had to have pissed them off, so maybe they’ll just hold off on any interest rate increase just to make the President go ballistic.
After all, by helping trigger an unnecessary recession in 2020, the nation’s central bank can assure than a couple million of us get pink slips that year, assuring the election to the presidency of whatever brainless gasbag-socialist gets the Democrat nomination next year. (The Chi-coms would be happy, too. They haven’t managed to steal allof our technology quite yet. But a President Warren or a President Biden would give ‘em a hand.)
I digress, however. There’s probably no point at this point in constructing fantasies just like the Democrats do every day. We can only deal with what we know and what we see.
Consensus is for a July interest rate cut
And what most of Wall Street’s gurus, talking heads and hedge fund managers think right now is that the Fed will cut the magic word “patient” and then cut interest rates next month. We shall see. It’s now about 1:45 p.m. ET and all three averages are now an eensy bit below flatline and flashing red.
In other words, “they” aren’t flashing their usual clear signal yet. So we might just have to wait until after 2 p.m. to see what happens. If the Fed minutes offer any surprises, we’ll put an update on this article when we figure things out. Right now, it’s still “Waiting for Godot” mode.
Bottom line: If the talking heads see the word “patient” in the Fed’s latest word picture, then it’s probably time to slap on a few hundred shares of the double-short S&P 500 ETF, aka, trading symbol SDS, an appropriately left-wing symbol in our post-democratic world. If we don’t see “patient,” however, today’s reaction could be about the same, as the high-speed machines will want to do some profit taking from Tuesday’s big rally.
Mr. Market continues to be a weird creature, so we await the outcome.
Crude oil spikes, not “Waiting for Godot” at all
Elsewhere, in news that should have made Mr. Market happy, crude oil finally caught a nice bid this morning after weeks of wicked per barrel decline, as noted by CNBC.
“Oil prices turned around on Wednesday after a surprise draw down in U.S. supply lifted sentiment in the market.
U.S. crude inventories decreased by 3.1 million barrels last week, according to Energy Information Administration.
“Brent crude futures traded 22 cents higher at $62.36 a barrel. U.S. West Texas Intermediate crude rose 26 cents to $54.16 a barrel. On Tuesday, it had recorded its biggest daily rise since early January.
“The reported EIA data was more bullish than previous supply data released on Tuesday. The American Petroleum Institute said U.S. crude inventories had fallen by 812,000 barrels.”
How big was that oil spike?
ZeroHedge sketches out for us, in chart and verbiage, how dramatic this oil price snapback actually proved to be.
“WTI hovered around $53.70 ahead of today’s inventory data but spiked to overnight highs after the surprise inventory draw…
The Trump-Xi meeting has traders’ hearts beating
On other fronts, looks like the Trump-Xi confab at the G-20 gabfest is on, adding a touch of optimism to the scene. But I don’t expect this to amount to anything positive, at least in the near term. As noted earlier, the Chi-coms may just want to stall Trump off, perhaps assuring his defeat in 2020. That would bring them a wimpier Democrat president in 2021 who’d capitulate immediately on the trade front to make all the wealthy coastal CEOs and the unpatriotic bastards in the US Chamber of Commerce happy.
And the Decline of the West would resume at its normal pace. That’s because China believes in “fundamental transformation,” too.
Waiting for Godot. Hope he shows. With today’s Fed minutes in hand.
Confounding many “experts,” the Federal Reserve did eliminate the word “patient” from its latest Fed minutes, just released Wednesday at 2 p.m. But they also indicated they didn’t expect to cut rates until 2020. Perversely, that’s led to a minor rally from flatine for all three major stock averages, with the current leap forward (at 2:20 p.m. ET) coming in at around + 0.20 percent thus far. It’s foolish to lay down bets as to where we’ll be at today’s close.
The Fed’s almost unanimous intransigence unambiguously signals that the nation’s central bankers are publicly at loggerheads with President Trump. No surprise here. But in point of fact, Trump is publicly wondering whether or not to “demote” the Fed Head that he, himself, nominated to succeed Janet Yellen. Namely, Jerome Powell.
Could be another Washington Deep State power struggle here. We’ll just have to wait and see.
Meanwhile, Treasury bond yields continued their downward trend today, remaining stubbornly below the Fed’s current interest rate targets. Is the T-bond market screwed up? Or are the bond vigilantes, like President Trump, telling Powell and his palls, that, like Jon Snow, “They know nothing?”
– Headline image: Ian McKellen and Patrick Stewart in a Broadway production of Samuel Beckett’s absurdist drama,
“Waiting for Godot.” (Image via Wikipedia entry on the play, CC 2.0 license)