When What’s Expected Isn’t What’s Wanted 

It’s Fed day. 

What that means is that all market eyes, including my own, were eagerly anticipating the decision on interest rates by the Federal Reserve at the conclusion of the latest Federal Open Market Committee (FOMC) meeting. The markets also were eagerly anticipating the comments by Fed Chairman Jerome Powell in his post-FOMC-statement press conference. 

So, what happened? 

Well, the Fed basically did what analysts expected. It cut the benchmark interest rate cut by 25 basis points, lowering the key overnight lending rate to a range of 1.75%-2.00%. 

Interestingly, three policymakers dissented on the decision, with St. Louis Fed President James Bullard preferring a more aggressive 50-basis-point cut. Boston Fed President Eric Rosengren and Kansas City Fed President Ester George both opposed a rate cut, as both have stuck to their “hawkish” guns. The other seven voting members of the FOMC opted for today’s rate cut.

Now, going into this Fed meeting, markets were hoping for more than what was generally expected. I find that interesting, and generally a prescription for disappointment. 

As we all know from other walks of life, what we expect to happen isn’t always what we want to happen. Most of us expect life to be a struggle, yet most of us want to get a few lucky breaks along the way. And if we don’t get those breaks, we can sometimes be very disappointed. 

The smart money on Wall Street wanted a 50-basis-point interest rate cut and a clear signal from Powell that there would be more interest rate cuts before the end of the year. Well, that didn’t happen, and so the market expressed its disappointment with a post-FOMC selloff. 

The one-day chart here of the major domestic indices, pulled just after the Powell press conference ended, shows the Fed effect on stocks. As you can see, the selling started right at the 2 p.m. announcement and continued from there. Encouragingly for the bulls, the majors did manage to move back off session lows, as Powell’s press conference did offer some encouragement for buyers. 

The bottom line here is that markets are disappointed by the Fed, but the reason why is because the markets always want the Fed to be more “dovish” than it is. The markets always want lower rates, as that is generally a very good thing for the bulls. 

So, while the markets didn’t get what they wanted, they did get what was expected — a Fed that reduced the cost of capital commensurate with what it sees as an economy that is generally strong, but that has seen some mixed economic signals of late. Those mixed signals include consumer spending that remains robust, but manufacturing activity that has weakened. 

Finally, I would encourage my fellow traders on Wall Street to remember the following lyrics from a Rolling Stones classic: 

You can’t always get what you want

But if you try sometimes

You just might find

You get what you need.

Keeping this notion in our heads might just keep us all from ever getting too disappointed — both on Wall Street and on Main Street. 

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The Fascinating Path of a Righteous Warrior

Want to hear a true story of international banking intrigue during the Vietnam war? 

Well, then I’ve got just the thing for you, courtesy of the latest installment of the Way of the Renaissance Man podcast. 

In this episode, I speak with precious metals expert Michael Checkan, president of Asset Strategies International. 

Michael is a hard-money warrior and someone who has been in the precious metals business for more than half a century. During this conversation, you’ll learn all about the work Michael did for Vietnamese refugees to help them start new lives in the United States. 

(Photo Credit: Unlock Your Wealth TV)

You’ll also find out how Michael assisted these refugees in converting their golden “Taels” into U.S. dollars — dollars that allowed them to make America their new home. 

Plus, find out Michael’s current views on the latest run higher in gold prices, the tailwinds propelling gold’s price and why it makes sense for every Renaissance Man to consider owning some physical gold in his portfolio. 

I loved this conversation with Michael Checkan, and I know you will too. 

To listen to this episode of the podcast, simply click here right now. 

For more about Michael and his firm, please visit Asset Strategies International. 

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Barris’ Dark Wisdom 

“I came up with a new game-show idea recently. It’s called ‘The Old Game.’ You got three old guys with loaded guns onstage. They look back at their lives, see who they were, what they accomplished, how close they came to realizing their dreams. The winner is the one who doesn’t blow his brains out. He gets a refrigerator.” 

— Chuck Barris, “Confessions of a Dangerous Mind”

Those of us who grew up in the 1970s will remember iconic TV game shows such as “The Gong Show,” “The Dating Game” and “The Newlywed Game.” These shows were the brainchild of producer Chuck Barris, who also wrote the unbelievably interesting autobiography, “Confessions of a Dangerous Mind.” The book also was made into a very good film that I recommend directed by George Clooney.

Now, as dark as this week’s quote by Chuck Barris may be, it does make a critically important point about life. You see, if we look back on our lives and see what we’ve accomplished, will we be winners? Will we be proud? Will we get that refrigerator? Or, will we be tempted to squeeze the trigger? The choices you make determine your existence. Make the right choices and you win.

Wisdom about money, investing and life can be found anywhere. If you have a good quote that you’d like me to share with your fellow readers, send it to me, along with any comments, questions and suggestions you have about my newsletters, seminars or anything else. Click here to ask Jim.