FED Meeting Today

When no interest rate hike is expected the FED meetings always seem to be lost in the news of the day.

Today the FED starts their meeting, which will result tomorrow with no FED Funds rate hike. It would be near impossible to raise rates at this time as there is almost zero expectations for a hike–and while the FED would have you believe they don’t pay much attention to the markets I think they are paying plenty of attention to the markets.

While the meeting will not result in any rate hike Chair Powell will have a news conference tomorrow afternoon and that can always result in some fireworks in the marketplace.

Probably the key items markets will be watching for is further news relative to the runoff of the balance sheet. Right now the balance sheet stands at $3.97 trillion dollars. The question would be – what level does the FED plan to take the balance sheet to eventually?

4 thoughts on “FED Meeting Today”

  1. Commentators seem to be putting substantial pressure on Powell to make a commitment to end the runoff, or say when the Fed will stop. I don’t understand that pressure. First, the Fed has to have the flexibility to respond to changes in data, and we have seen some mixed signals lately. Simultaneously, the markets seem to be expecting progress in trade with China, which one would expect would stimulate the economy. But Powell has to commit to no rate increases and no more runoff? Seems like a recipe for some disappointment. Second, doesn’t it seem a bit of a concession to say the balance sheet will stay put at about $4 trillion. How big will the balance sheet get next time there is a crisis, and the Fed has to start buying again?

  2. Please note the S&P 500 (VOO) is up a whopping +13.48% YTD. In my thought process, the Fed is caught and cannot raise or lower rates for the foreseeable near term future. Tim is right in that the only Fed Issue right now is what they are going to do with their own balance sheet (buying or selling). Our US debt ($22+ TRILLION and counting) ($6.5+ TRILLION unfounded pension liabilities) ($1.5+ TRILLION Student Load Debt) ($6+ TRILLION budget deficit) and trade deficit continues to rise dramatically http://www.usdebtclock.org The best news that could propel the US equity markets higher would be a favorable trade deal with China. I am taking some equity chips off the table; this IS NOT a recommendation as each investor should do their own deep due diligence before buying or selling.
    Wishing you profitable investing, Nomad

    1. Nomad and Crew, I resonate with your thoughts. Self-directed managing is a really tough. In a high risk market, focus on bombproof positioning and enjoy the good night’s sleep.
      BUYS: I have removed all buy-limit orders, this would include any reinvestment of Q1 divys, I have let them accumulate as cash, not a usual response by contributors here, or usually myself. I think I will see better entry points and look to expedite manual order as I see it unfold.
      SELLS: I have retained sell limits on almost everything to anyone who wants to reach, pre or x-div. Please step up I’d love to see a surprise in my trade queue. It’s that kind of market, a Seller’s Market.
      I believe the basic landscape has shifted to a tilt up in interest rates policy (politics) tied to rate tightening. I vaguely remember my 13% mortgage. A generational first wave up in yields over a long period of time accompanied by credit sustainable credit worthiness will remain important. Stay safe so you can spend the divs a a nice trip! We ain’t gonna live forever anyway!
      PS: I have noticed a general quality slide in new offerings and add-ons to already crappy balance sheets. Mission: Eyes wide open. JA

      1. Joel, I to feel it is a sellers market and am now 26% cash (primarily because I was 100% cash in late November when I began my income investing journey). I just don’t see any bargains out there that I have not already taken advantage of thanks to yourself, Nomad, Grid, Tim and many others here.

        The equity markets seem hyper to me now and S&P500 may have a another little run up before topping out, again. Then what? I want to have ready cash if we see a serious drop in the future. It was certainly a wonderful time to start my buying late last year, perhaps it spoiled me.

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