Two things happened in the markets this week:
- The Fed Pivot
- What’s a Recession Anyway?
First, the Pivot. Which hasn’t happened, insofar as I can see, but the markets appear to believe that the Fed has “pivoted” – setting up to raise rates less enthusiastically than previously thought. Listening to the Federal Open Market Committee statement (Source) I couldn’t spot an actual policy pivot, but prices of many items jumped substantially higher at around five minutes into Powell’s statement, and the rally didn’t stop until trading ended on Friday. Prices of gold, silver, equities, the 10-year bond, and the Euro all moved higher more or less together.
Wolf Richter agrees with my viewpoint, calling it “the most hawkish FOMC press conference I ever watched.” (Source) He doesn’t mention a pivot either. But what do we know?
- Gold +39.50 +2.29%
- Silver +1.58 +8.49%
- Crude +1.72 +1.82%
- SPX.N +168.66 +4.26%
- Junior Miners +2.84 +9.23%
- USD -0.38 -0.36%
It sure looks like gold’s curious bullish reversal seen last Friday turned out to be a legitimate signal. Of course, we have no idea how long people will believe in this “Fed pivot” – it could all vanish next week. The less trading I do, the less money I tend to lose. This is what last Friday’s daily reversal plus this week’s “pivot” rally looks like on the monthly chart: the model still shows a downtrend, but it definitely likes the monthly candle print. (Yes, I got my code mostly back working again.)
Now for recessions. President Grandpa’s Handlers got the early word this week from the economic bureaucrats: “real” GDP was going to fall, resulting in a recession (defined as two quarters of negative real GDP), and so the Handlers rounded up their media flunkies to convince us all that two quarters of negative real GDP isn’t actually how recessions are calculated. It reminds me of the CDC and its hasty redefinition of “vaccination” in the post-COVID world: (previously: “The act of introducing a vaccine into the body to produce immunity to a specific disease”; post-mandated mRNA vaccine: “The act of introducing a vaccine into the body to produce protection from a specific disease.”)
This week’s intense not-a-recession gaslighting campaign was an interesting exercise.
by davefairtex 
