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.

Today’s Session

Meanwhile the market is right on track with historical reactions to new rate cutting regimes.

Today’s session got an extra boost ahead of the opening bell when Intel (INTC) announced it was getting a $5.0 billion lifeline from Nvidia (NVDA) (20 years after the Intel board rejected the CEO request to buy NVDA for $20.0 billion – saying it was too expensive).

Comments

Jmho, but if labor/employment has become the bigger threat. In my mind why not go for 50bp to start with, instead of the mention of potentially 2 more 25bp cuts before the end of the year? I'm not an expert, but it doesn't make sense. Many point to the last unemployment number, even that it only ticked up a notch to 4.3% as still being in the range considered full employment below the 4.5 previously stated as a concern by the Fed-R or 5.0 by others that they would be good with. My question then becomes, exactly how many let go and given severance pay packages, paying them out for weeks/months ahead as if they were still considered as employed and not eligible to file for unemployment until after that ends? It also seems to me that this drip, drip of 25 at a time helps no one in the majority for various reasons. Terry Dowler on 9/18/2025 1:46:20 PM

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