FED Watch: The Fed Wants Lower Equities

Discussion

The RenMac team spun itself into knots this morning trying to figure out why the Fed won’t start with a 50 on September 18. It’s simple…

The only explanation for Waller’s very hawkish commentary this morning is the Fed wants SPX lower in order to cleanly underwrite a move to 3% neutral by next spring. JPOW was adamant at JHOLE that the Fed does not welcome further cooling in the labor market - Waller verbatim said the labor market cooled further in this latest report, but that the Fed can start with 25 because labor isn’t “deteriorating”.

This dynamic is illogical, hence my conclusion the Fed wants financial market justification for a deeper/faster cutting cycle.