Market On Open, Thursday 10 October

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FOMC Minutes, CPI And Blah

by Alex King, CEO, Cestrian Capital Research, Inc

Anyone know what was in the FOMC minutes, published at 2pm Eastern yesterday?

Anyone?

Bueller?

That’s right. Nobody cares. Because 50bps, because probably inflation isn’t dead yet, and because probably more cuts. That’s a recipe for more bullishness, until the inflation gets too much to ignore, and then around we go again.

We have CPI today which has the possibility of a rug pull for bulls and bears alike. It’s not really about CPI though, it’s about the Fed’s response to CPI. Because for now there is a chance we get an inflationary bull market. 2022 was an inflationary bear market. Which means it’s not the inflation per se that determines the direction of stocks; it’s the policy response to inflation. If the Fed is hiking rates and reining in lending, that’s bad news for equities because there is less money available and at higher prices than was previously the case. If the Fed is cutting and expanding credit, there is more money more cheaply than before, which degenerates of all kinds, from Buffett lieutenants to hedge fund managers to family offices to independent investors, will all see as an opportunity to borrow cheaply and then load up. And thus the seeds of the eventual bear market will be sown. But not today, I think. (We may well get a vomit-inducing seesaw market today on the CPI print, but that’s just market makers taking stop-loss money off of people for fun. The real direction will set in sometime tomorrow probably).

Short- And Medium-Term Market Analysis

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