My take on the initial market read through directly following today's Fed announcement?
NO ONE knows what the "F" to do. It's total pandemonium out here. Do we buy or sell the USD? Do we buy or sell Treasuries? How about stocks?
The chart below offers a nice picture of all the confusion created by today's Fed statement:
Notwithstanding the initial market reaction, our reading of the FOMC statement is:
- U.S. Recession risk is rising
- Weak Dollar reflates EM
Interestingly enough, this might be the most in line with Hedgeye's research outlook the Fed has been since spring of 2013 when we were wildly bullish. The Fed acknowledged our #GrowthSlowing view -- which itself is actually about to get a lot worse.
(Note the sea of red in our compendium of U.S. economic data below)
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In fact, the entire first paragraph of the FOMC statement reads like the economy is headed into #Quad4 led by the consumer:
Click the image below to enlarge.
so ... now what?
A follower of mine on Twitter remarked that Fed potency is waning and next up would be QE4. I agree, but you're not going to get QE4 without first having another "flush." Furthermore, we've always maintained that if the Fed pivots too bearish on the U.S., it will freak investors out as it always has:
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some simple advice for investors...
Want more? Watch Darius and Hedgeye CEO Keith McCullough in the new video below.