This morning I sat in front of my blank page longer than usual. Longer than usual because I had two options; First, explain the rise in rates and the market response of 9,000 symbols to conclude that the world’s stock exchanges welcomed the fact that the Fed will not raise rates by 0.75%. Or tell you that the Fed raised rates by 0.5%, that the indices took 3% and that we are now wondering what Friday’s employment rates will give, and that we are mostly Dora in Nemo. A blue fish that instantly forgets everything. And to be honest. Now I don’t even know what I’m going to do.

Audio from May 5, 2022

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Let’s leave the rest and go for a walk

So let’s start with the facts; The Fed has raised rates. It was planned. The Fed raised the rate by 0.5%, which was also expected. The Fed was vindictive and motivated to fight inflation by speaking directly to the Americans and telling them that they understood that it was difficult, but they were “with them.” When you know the level of salaries of the guys in the Fed, I’m not sure they really understand, but it’s financial policy. In any case, it was also planned. The Fed has announced that it intends to reduce its balance sheet from June. Another thing that was planned.

It’s crazy to see that in terms of financial forecasts, the world of finance has been more or less completely in the last few months, but as far as the Fed is concerned, we almost get the impression that Powell released his Goldman Sachs press release three weeks ago. , Morgan Stanley, Bank of America, JP Morgan, UBS and Credit Suisse. Virtually nothing said last night came as a surprise. It seems that the fall in the last 3 weeks was only because the Fed announced last night. But now that they’ve made it AVAILABLE, it’s changing everything. We can fill the coffers, use foreign accounts, sell jewelry to grandma, put the dog up for auction on eBay and buy on the market as if COVID and the war in Ukraine had never existed. All this without taking into account the fact that the Fed even commented on DOVISH, and it changes everything.

Well, at least until tomorrow’s employment rate, which will also change everything. Finally, by next week, the CPI, which they really will change. Finally, until the next meeting of the Fed, which will officially and realistically change everything.

In any case, a pigeon (or a secret pigeon)

So. In everything we were told last night, we already knew everything for a long time, because we are dreamers and we are VERY STRONG, but it is only very well known and very much in agreement. However, in the midst of all this, knowing that we know almost everything and that everything is “valued” in the market, we still had to find a reason to increase the indices.

And we found a solution in Powell’s words. Indeed, when he had just announced a 0.5% increase and realized the suffering of Americans, who suffer from inflation more than COVID, Jerome Powell said he should not expect growth of more than 0.5%. And then everything changed.

It was as if he had dumped cocaine into the air conditioning system on Wall Street. EVERYONE GET UP to shout HELLO !!! And then the market rose. The head of the Fed has just announced that he is NEVER going to raise rates by 0.75%. In addition, he did not even say that “so far will not raise rates by 0.75%. And since he did not say “at the moment”, it definitely means NEVER. And this, this is a mega-pigeon sign, which means that he still loves us and wants global stock markets to rise !!!

Read between the lines

Either way, this is what you had to read between the lines. And the speakers read very well between the lines. Well, they didn’t notice the fact that in the history of the Fed there was ONLY ONE 0.75% increase – that it was Greenspan, and he had to do it because he missed the increase because of the US election. But this is a detail, and we saw that the rate increase was under control and temporary. Under the control of 0.5% and transitional for the next 18 months. As then inflation.

In short, the indices rose. The Dow Jones was up 2.81%, the S & P500 was up 2.99% and the Nasdaq was up 3.19%. SOX jumped 3.9%, and everything went well in the best of all possible worlds. Similar to the Hollywood scenario, the good guys eventually win, and the bad guys return to the Gulag or drop out of 64th on top of the building they stormed on Christmas Eve. What else to say, except that we returned to the fact that rates will not increase by more than 0.5% per meeting and that Powell was confident that the Fed will be able to cope with the “soft landing”… And that we are in it believed…

A day worthy of a master’s degree in psychiatry

There. In the normal world yesterday, we could also talk about UBER figures, which were not very bad, but which did not actually compensate for the rotten forecast of Lyft the day before. We could say that Albemarle undermined first-quarter earnings and revenue forecasts, and management added $ 1 billion to its year-over-year sales forecast, boosting trade by 15% after the market ended. This performance follows Livent’s publications, which announced about the same thing, confirming that Lithium is still good. Basically, thanks to Mask, thanks to the batteries and thanks to the wonderful world of electric cars.

One could also say that Europe has courageously implemented an easy plan to boycott Russian oil. It is easy not to “irritate” Putin too much, and for oil to rise to $ 108 per WTI and $ 110 per Brent. And that this will surely correct the temporary inflation. We could also say that Airbus exceeded market expectations and increased its production targets, that Ubisoft’s main shareholder would go to a large investment fund, that Moderna exceeded market expectations in terms of vaccine sales, and its CEO shouted in the media that accelerator approvals don’t happen fast enough, and we’ll all die from COVID because of it. We could also discuss Twilio’s ads and its rotten directions, but despite that, the title took 10% during the day or even the Etsy figures, which were all rotten and fell by 10%. Not forgetting that it could be said that in the region of Ukraine, the Russians are testing short-range missiles capable of carrying tactical nuclear charges. That the same Russians are regularly invading Finland and that the same Finland is looking at NATO softly and seems ready to go to bed on the first night. Which should make Putin very happy.

We could talk about all this, of course. But last night, the Fed announced that it would not raise rates by 0.75% at future meetings of the same Fed. So how can I tell you that the rest …

We don’t care.

We are Dori, the blue fish in Nemo.

And what then?

Futures are unchanged. Asia doesn’t do much. Bitcoin has risen to almost 40,000, almost thinking about giving up the 0.75% increase in the Fed, I told him personally. Today we will have CPI in Switzerland, industrial production in France, unemployment claims in the US, and tomorrow… We will have employment rates in the US, and that can change everything. There will be quarterly Shopify, Crocs, Conoco, Lucid, Wish and DoorDash. But also Stellantis, Swiss Re and SocGen. But who cares, you know what? The Fed will never raise rates by 0.75%, NEVER, and even if logically we had about as much chance of seeing a 0.75% increase as after the death crushed by a Millennium Falcon crashing on Earth, it’s still was the USUAL NEWS OF THE DAY, WHICH CHANGED OUR LIVES AND FORCES THE MEDIA TO TALK ABSOLUTELY ONLY ABOUT IT ..

Have a good day until tomorrow to talk about the 400,000 new jobs expected in April to see if it’s inflation or not, and whether we can assume that the Fed may one day consider raising rates. by 0.75%, and that can change everything.

See you tomorrow !

Thomas Veylet

“Courage does not always roar. Sometimes courage is a voice at the end of the day that says, “I’ll try again tomorrow.”

“Mary Ann Radmacher.”