The biggest surprise of the December FOMC meeting was the pivote in stance by "tough-talking" Jay Powell. He was still discussing caution in December, but by the middle of the month, he became as dovish as the market.
Did the market respond positively? Just look at the immediate new high of the $DJIA(.DJI)$ and $Apple(AAPL)$ historic high despite the obstacles.
However, I believe the entire internet should thank a special Federal Reserve official (or rather two):
In this vote, they successfully pushed the target interest rate for 2024 to the 4.5-4.75% range, which lowered the median of the Fed's dot plot to this level, leading to the conclusion of three rate cuts in 2024!
Note: Median - a value that divides a sample, population, or probability distribution into two equal parts.
The results are:
1. The media headlines after the meeting were all about the Fed's expectation of three rate cuts in 2023 (compared to the expected two cuts).
2. This also forced Powell to express a more accommodative tone in order to align with his colleagues (or it could be that he personally supports more rate cuts).
In the current market environment of "action in advance" and strong consensus expectations, there is a high level of convergence in trading, so a positive development can have a strong cumulative effect.
Conservatively estimating, these two votes likely created a market value of over one hundred billion dollars for the stock market on December 13th.
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