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Anyone hoping to see a little more volatility finally got it today… but not necessarily in the shiny bearish package they were counting on. Indeed, the S&P 500 finished the day – and the third quarter – with an all-time high close.
This comes barely two months after the market made its early August correction. It seems like the hope of Fed rate cuts propelled the market higher amid economic uncertainty… but I’m not so sure.
Because, if we look at the market through an inflation-adjusted lens, we see through the bullish mirage, the veneer of strength.
Ultimately, it’s been a weak dollar that’s lent the appearance of bullishness. Factor out the dollar… and you’re nowhere near highs.
That being said, Powell’s statements today helped lift the dollar and the markets rallied off lows. He moderated the dovish tone a little and was able to see equities lift and gold dip.
So the questions we’ll answer tonight go something like this: Is this just the beginning? Or is the ongoing rip in Chinese stocks and concurrent drift in U.S. equities reaching its climax ahead of a lot of uncertainty heading into the election?
Let’s find out…
