(These are market notes on today’s action by Mike Santori, senior market commentator at CNBC. See today’s video update from the microphone above.) The market is settling into a stable economy with loose financial conditions 24 hours before the expected reopening of the Fed rate. Wall Street is all celebrating and sharing historical research into what happens when the Fed falls after a long suspension and the stock market is within 2% of its record high. In both cases, stocks have stronger forward performance than average. And of course, every time the Fed is cut without a recession the following year, the market is on track. A year ago, such research was popular and it was discovered that the market has been revived by scripts ever since. This is all intuitive and reassuring, but there was often some indigestion in the market right after the cuts and a few weeks later. And of course, the parameters used in such studies are extremely important. In September 2007, the Fed eased the S&P 500, which was within about 3% of its record high. A year later, it was 20% lower in the middle of being cut in almost half. Retail sales that were better than Tuesday’s August forecast contributed to a robust reading to the dissonant set of macroeconomic signals. Expenditures have been uneven this year, demand for pull-forward ahead of tariffs, followed by apparent re-control. Consumption should remain in place unless the net loss of employment is completely damaged. Also, more positive households are spending a lot of money thanks to the rise in the stock market and the effects of wealth from healthy interest income. Despite this, comparable weighted consumer split stocks perform poorly, previously weaker travel names, deepening the struggle for restaurant stocks. It’s a difficult macro background to read. While downward pay revisions and clear and dramatic erosion of labor market momentum from survey data have sealed off the deal for the more robust Fed, there are sufficient other indications that affect the situation that affects the labor supply, which sees some of those who see a part of those who have a picture of the work, rather than a faithful reflection of the underlying growth trend. It’s a wealthy household living it, and big technology cultivates $300 billion to build a data center that obscures the wider debilitating? Or is the Fed trying to put pressure on the economy that is not too stressed? Adding the cyclical benefits of consumers, we see the actions of several laguard over leaders. Several big winners are on sale, including Ge Ververnova and Howmet Aerospace, but nine of the 13 worst stocks have increased day to date, with energy moving 1.8% ahead. Before the Fed’s decision, the very average reversal action in the market is drawn into a neutral scaffold. Many people are asking for a “sell news” response to the Fed tomorrow. Clearly, there is room for that given how steady the consensus has grown and how far prices have progressed. The Bofa Global Fund Manager Survey has been the most aggressive bullish stance since February, but it’s still not as high as February. It’s no longer a disliked gathering, but we are still shy to everyone who acts with fearless recklessness. Are you too many people expecting such wobble? And if there is a reflex of the selling, what do you sell? Is the currently used MAG7 stock, Nasdaq100, back to its multi-year valuation cap of 28x forecast revenue? Will the cycles and small caps that the textbooks say benefit from the simpler Fed? Could bonds that float for a week after the ripping rally be a pain if attention returns to sticky inflation? But even if it unfolds, even if you can’t persuade and explain the actions and intentions from here, bullish tendencies are innocent until proven that they are not.
