Some rotation on Fed Day, which was not unexpected. However, most factors finished in the green, which suggests the potential for a rally, albeit masked by weakness in growth stocks.

Freedom

Jay Powell was champing at the bit when he strolled to the microphone yesterday.  The FOMC had a new member, and it's clear they were not happy with him. When asked about Stephen Miran, Powell took the opportunity to mention “independence.”  Interestingly, the whole thing was such a fiasco that the credibility hit is the latest threat to said “independence.”

Language Matters

The FOMC statement underwent numerous changes, and during the question-and-answer period, Powell made additional noteworthy comments and observations.

• "I think that downside risk is now a reality, and there’s clearly more downside risk" to the labor market.
• "Quite unusual" situation.
• "It's not a bad economy,"
• "It's not incredibly obvious what to do."
• “Curious balance” in the labor market.
• “Risk management cut.”

Ball of Confusion

The real confusion came with the so-called dot plot of members' ideal actions on rates.  It was all over the board. In a word, this is “nuts.”

But Wait…There’s More

Jay Powell acknowledges the risk to the labor market, but the FOMC lowered its unemployment projection for next year while increasing its inflation assumptions. Meanwhile, GDP is also expected to rise.

Reactions

The stock market remained relatively unchanged, with an upward bias still in place.

Fear Index

The Volatility Index (VIX) declined during the session, so much for a wave of fear.

30 Year Bond

I know the Fed can’t effectuate moves in the 30-year bond, and yet the yield in this bond has come down rapidly since conventional wisdom shifted to a series of rate cuts.

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