This week saw the official return of “bad news is good news” as the more bad news means more Federal Reserve intervention. Economic data was poor and the markets cheered it on, as Jerome Powell rode to the rescue Tuesday on his white stallion and after his now famous “patience” line in late 2018 led to a massive 20%+ rally we have “act as appropriate to sustain the expansion”. Translated – the interest rate cuts are coming. Tuesday’s performance was the market’s best since January 4th.
“The potential that the Fed could step in and maybe cut rates is a definite comfort to markets and investors,” Kayrn Cavanaugh, senior market strategist at Voya Investment Management told MarketWatch. “The market had also gotten oversold in the past couple of days,” she added. “So a lack of bad news on trade, along with the Fed saying its ready to step in to save the economy if needed, was enough for the market to rally.”
ISM Manufacturing came in at 52.1 vs 52.8 the prior week. It is starting to creep into the danger zone near 50 which signals the cutoff point between expansion and contraction.Continue reading