It was a “Fed-Stravaganza” in the markets yesterday, with everything from stocks to bonds to gold exploding higher after the latest policy meeting in Washington. In fact, the Dow Jones Industrial Average set an all-time high, topping its previous Jan. 4, 2022 peak of 36,799.65.
More on the news in a minute. But first, we’re seeing additional gains in stocks, Treasuries, and precious metals this morning. Crude oil is getting in on the fun, too, while the dollar is falling again.
As for the Federal Reserve, what can I say? The markets were on pins and needles heading into this final policy meeting of 2023. They were expecting the Fed to do nothing with interest rates, which is what ended up occurring. But investors weren’t sure if Chairman Jay Powell would validate their belief that developments on the growth and inflation front would likely lead to a handful of rate CUTS in 2024.
Enter the Fed’s “Dot Plot” forecasts, officially known as the “Summary of Economic Projections.” They show what Fed members think will happen with GDP, PCE inflation, unemployment, and other indicators over the next few years. They also provide a summary of where policymakers expect interest rates to go. The bottom line? The Fed expects to cut rates by around 75 basis points next year...then cut them FURTHER in 2025 and 2026!
The Impact of the "Powell Pivot"
You can see the impact on the S&P 500, the Dow, the iShares 20+ Year Treasury Bond ETF (TLT), and the SPDR Gold Shares (GLD) in this intraday chart. PLUS, Powell didn’t push back on Wall Street’s euphoria during his post-meeting press conference. That essentially validated the action, fueling an even-bigger “Santa Claus” rally.
A big “hats off” to the MoneyShow experts who have been saying in articles...during in-person keynotes, workshops, and panels in New York, Las Vegas, Orlando, and Sarasota...on our Virtual Expo platform...AND on our YouTube channel/MoneyMasters Podcast all year that:
1) This would be a great year for “Big Tech”
2) We were likely to get a Fed pivot and a big, gold rally and
3) The July-October pullback would turn out to be just a correction, one followed by a dynamite fourth-quarter rebound that would likely last into the new year.
Readers, viewers, and attendees: I trust and hope that helped you profit from what has been a great 2023 for many markets – and we look forward to helping you profit even more in 2024!
