S&P 500 (SPX) head-fakes were hilarious as just removal of the accommodation sentence from the Fed’s statement should have outlined the era’s shift, writes Gene Inger.

It is a transition that’s been going on for many months, but ignored or even a bit fought, by money managers trying to pretend everything’s copacetic.

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I’ve done my best to warn of this complacency including an expectation of the stock market initially reacting favorably (relief that the rate hike was a done deal), and then selling-off with more selling during late week action with of course intervening rebound behavior.

Reuters: Communication services stocks push Wall Street higher Thursday.

chart 2 

Now the common assessment will be that the chairman warned assets at a high level were a concern but he also dismissed the connection. And it was pretty evident that the rocky behavior was commencing before he said that incidentally. He is trying not to break things, and tried to remain fairly neutral when it related to politics or trade.  

chart 3 

Chairman Powell did acknowledge the concern about tariffs & trade their Reserve Banks are hearing around the country.

So that’s not only obvious but as I wrote extensively about just recently its part of what restrains the expansion of CapEx (Capital Expenditures) or puts corporation plans on hold pending resolution of both the trade sparring and upcoming Midterms too of course.

It’s an expensive market but there is an argument for growth in the year ahead if we can overcome political roadblocks and trade. 

Now Powell didn’t talk much about that but the uncertainty and willingness to adjust depending on what the future holds, were central to his remarks.   

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