Is The Fed Done Raising Rates Or Just Taking A Coffee Break?

Is The Fed Done Raising Rates Or Just Taking A Coffee Break?

May 09, 2023

From the desk of Vance Howard:


Chart: QQQ 1-year daily

The Fed raised the rate by 25 bps last week, and in our opinion they are most likely done. If they had not raised rates, there would have been a big question as to how bad the bank issue is/was. As we said before, we think the Fed is done raising rates. Banks have pulled back from lending which will slow things down, and we believe the possibility of a soft landing, or no recession is looking promising.  

The markets are in a clear uptrend, and pullbacks are buyable. The markets are still very shaky, as investors are on edge after 2022, and this is understandable. The QQQs, which is an ETF that tracks the NASDAQ 100, has just peaked its head above the $322 mark. This is a pivot point, and any real break above that level would indicate a new breakout to the upside with a target of $380, which would be a very strong move.

Money market shares show that assets were again higher among the largest U.S. money market fund complex in April. Money market fund assets jumped $56 billion, or 1.1%, last month to a record $5.685 trillion, and yes, that’s correct – trillion. Total MMF assets increased by $707.2 billion, or 14.0%, over the last 12 months. What does the massive amount of cash on the sidelines mean? It is the fuel for the next bull market, and it could go on for a long time.


Chart: KRE 1-year daily

Regional banks are trading like they are all going out of business, which is not the case. Look for a trader’s rally, possibly as high as 10-15% off the bottom.
Vance Howard

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