The fed minutes killed the markets today. Markets were mixed until the minutes were released. Fed minutes released this afternoon were much more hawkish than expected. What the minutes said: “Tightening sooner than anticipated now appears to be warranted.” There are signs the Labor Market is “starting to get very tight “. Economic forecast still looks strong but “ weaker than what was thought in November”. this kind of hawkish commentary by the fed hasnt been heard in years. What does this mean for equity markets for the next 6 months? Any opinions?
Nothing new here. Fed has been driving the market for the past 2 decades. Only even more so over the past couple of years.
The market will digest and move on especially with statements like "Economic forecast still looks strong but 'weaker than what was thought in November'”, meaning the stimulus might still be needed since the economic outlook is not as strong as expected so yes they will tighten but they can't tighten too much. The labour market being very tight is really Biden's fault of paying people to stay home and not investing more on robotics and automation technology at the same time so now nobody wants to work and it's forcing companies to have no choice but hike up the wages in order to attract human workers. Once everybody gets off their a$$ or everything is automated with robotics and AI, then the labour market won't be this tight and the inflation will be abated a bit. Biden could be the next Clinton by investing in automation technology in robotics and AI to take the economy and America to the next level but no he wants to go backwards to the 1950s and invest in infrastructures. A country's leader's lack of vision and intelligence is not the Fed's fault but the market will digest and adapt.
While the other markets like ES, YM RTY (to a lesser extent) weren't exactly clearly showing the long trap, the NQ was. If you pull up an NQ Daily, even without indicators you can see the selling started and long trap was set long before even today, much less at 2:00pm today. Yesterday we closed below the last 7 trading sessions. Clearly someone with size was looking to exit the NQ and took advantage of whatever liquidity they could find today prior to 2:00pm.
Well, Asia and Eurozone are not going to like the Fed's aggro one bit. Expect more selling overnight.
Yeah, I mean if people are this excited over relatively small amount of selling... they likely haven't seen anything yet. Of course no one can predict the future 100% and I wouldn't claim to, however I do believe in probabilities and technically we have a pretty strong probability of moving quite a bit lower in the next 1-2 weeks.