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“It’s Absurd” – S&P Tops 3,000 As Powell Promises Rate-Cuts Are Coming

Did The Fed jump the shark entirely with their non-data-dependent rate-cut that was so exposed today?

The most dovish rhetoric since 2017…

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“It is very difficult to look at these markets and listen to Jay Powell and make any sense of it,” exclaimed CNBC’s Rick Santelli.

Even the typical cheerleaders are losing faith. None other than CNBC’s Steve Liesman asked (rhetorically):

“At 3000 on the S&P and 1.83 on the 2Y, how much looser do financial conditions need to be.”

Powell spent the morning explaining how much “uncertainty” there is and why that means a rate cut is urgently needed… trouble is, stocks don’t care in the least…

Perhaps of even more note, even The Fed is waking up to the fact that it is – in fact – manipulating markets…

“While overall financial conditions remained supportive of growth, those conditions appeared to be premised importantly on expectations that the Federal Reserve would ease policy in the near term to help offset the drag on economic growth stemming from uncertainties about the global outlook and other downside risks.”

The Fed suddenly realizes the reflexive impact of its policies (and perhaps the vicious cycle endgame they know they will be unable to escape from by the time this is over).

Stocks only track global liquidity…

And nothing else…

So are bonds right? Or stocks?

Simply put, it’s madness:

[youtube https://www.youtube.com/watch?v=ilcRS5eUpwk]

Nasdaq (all time closing high) outperformed on the day, but it was the S&P crossing above 3,000 that made the headlines. Trannies ended red…

NOTE – stocks dipped into the European close before rebounding.

S&P tagged 3k at the open but failed twice to get back up there…

 

Small caps continue to dramatically underperform the S&P…

 

Defensive stocks once again dominated the gains…

 

FANG stocks are at critical resistance…

 

Treasury yields tanked on Powell’s reaffirmation of uber-dovishness, with the short-end massively outperforming (2Y -8.5bps, 30Y +3bps)…

 

10Y Yields stalled at the pre-FOMC levels and dumped on Powell…

 

But the 2s10s curve steepened dramatically…

 

One of the biggest steepening days of the last decade…

But while the curve steepened, 3m10Y remains inverted for 35 straight days…

The odds of a 50bps rate cut have exploded today, from 0% to 23%…

Before we leave rates-land, debt-ceiling anxiety is increasingly evident in the yield curve…

 

The dollar dumped on the day after Powell promised rate-cuts but remains well off the pre-payrolls levels…

NOTE – The move has been extremely technical, with the dollar index stalling at pre-FOMC levels and rolling over.

 

Cryptos had a bad day, tumbling on Powell’s prepared remarks and the incessant questions from Congress on Libra…

 

With Bitcoin bashed back below $12k…

 

Commodities were all higher on the day as the dollar dived but oil was the huge outlier…

 

WTI Crude exploded higher today, back above $60 as inventories showed major draws and tensions in the MidEast picked up once again…

 

Gold jumped back above $1400…

 

Finally, as Credit Suisse notes, this has been the longest period of negative macro surprises in the past 20 years – while it of course also has been the longest expansion ever…

But, since the June FOMC meeting, gold remains the easy winner…

Perhaps the precious metal is pricing in policy failure on an increasingly catastrophic level.


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About The Author

Tyler Durden

Zero Hedge's mission is to widen the scope of financial, economic and political information available to the professional investing public, to skeptically examine and, where necessary, attack the flaccid institution that financial journalism has become, to liberate oppressed knowledge, to provide analysis uninhibited by political constraint and to facilitate information's unending quest for freedom. Visit https://www.zerohedge.com

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