MBCC Trading Highlights 22nd September'22 - The Fed ruins the party for the bulls!

The Fed raised interest rates by 75 bps, as expected, but it was the commentary that followed that has once again upset the traders “wishing the Fed is done”. The Fed lowered its growth outlook, and raised its inflation outlook, yet only increased its unemployment outlook by 0.5%. This does not seem in sync with the slowdown being witness in the US/world for that matter. We feel the unemployment target is too low as companies are announcing more and more layoffs, the unemployment rate will be a lot higher than the Fed imagines. As usual, the Fed plays a backward looking role, and only reacts to a crisis, it is not daring enough to see one or plan for one. The more the investors expect the Fed to pivot, and try to rally the market, the more it gives them ammunition to keep raising as the economy needs it. This is one of the reasons why the market tries to rally as it holds on desperately  to any mention of a pause or a pivot, and then gets disappointed as we saw the market U-turn right after the Fed presser.

We DON’T think Oil is a buy yet and has more to fall. We have maintained that all summer. This will disappoint the bulls no matter how “cheap” it is, but sign up to see what is our rational and what our forward looking cross asset signals are telling us. Same reason we think Gold and Silver is NOT a buy just yet as well.