BOE, CPI and the Fed
Diupdate
We're probably going to bounce from here (maybe muck around for the rest of the week and bounce next week higher); I think the BOE's QE decision is going to have people hoping that perhaps the Fed will do the same. The fact that a central bank can flinch and go the other way is a huge psychological change. This is somewhat of an exogenous event to the positive, to an already oversold market. Rally is going to continue (this is also area of the 200 weekly MA support).
Then ahead is the CPI, and i think this may come in lighter than expected and the markets may rally even higher; hoping that the Fed will back off the 75bp hike and ease up going in to the end of the year. Of course it can be a terrible double digit number, in which case the markets will tank; basically translates to 'what the Fed is doing is not working, and they're driving the economy to the ground anyway'.
But despite the data, and any easing of raising, since the Fed has pretty much said that they want to reach a certain target (despite what they say about being data dependent and whatnot), they're gonna plow ahead with the 75bp raise, then 50, as expected. I think this will be a big downer for the markets, and they will, despite fairly solid communication by the Fed, lose faith in the FED and find them to be stubborn and unwavering, leading the economy in to a recession in 2023.
Having said that, there's always exogenous events that can change the course of this, mostly to the downside, whether that be Ukraine, Taiwan, or a worsending housing/real estate market condition in China, etc.
Then ahead is the CPI, and i think this may come in lighter than expected and the markets may rally even higher; hoping that the Fed will back off the 75bp hike and ease up going in to the end of the year. Of course it can be a terrible double digit number, in which case the markets will tank; basically translates to 'what the Fed is doing is not working, and they're driving the economy to the ground anyway'.
But despite the data, and any easing of raising, since the Fed has pretty much said that they want to reach a certain target (despite what they say about being data dependent and whatnot), they're gonna plow ahead with the 75bp raise, then 50, as expected. I think this will be a big downer for the markets, and they will, despite fairly solid communication by the Fed, lose faith in the FED and find them to be stubborn and unwavering, leading the economy in to a recession in 2023.
Having said that, there's always exogenous events that can change the course of this, mostly to the downside, whether that be Ukraine, Taiwan, or a worsending housing/real estate market condition in China, etc.
Catatan
Also note the 200 DMA currently at around 4220, and poised to be around the 4113 level come early November Fed meeting.
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