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Know the Playbook to Wall Street’s Wait-and-See Game

0 | By Shah Gilani

Generally, I want you to get your Capital Wave Forecast on Monday mornings, the earlier the better.

But I waited out yesterday to see how the market would “set-up” ahead of the Fed meeting starting today and their eventual rate announcement and “future guidance” musings.

I’d like to wait until after 9:30 this morning to see what the personal and consumer spending figures will be and how the futures react to those data points. However, by the time those numbers drop, and I can get the Forecast ready for you that will be later than I’d like.

So, your Forecast is coming to you with some caveats…

Some Caveats for This Week’s Earnings and Fed Announcements

Yesterday’s market action amounted to a lot of nothing.

Stocks’ earnings announcements moved those with news, one way or another. The market benchmark indexes, however, were driven by lackluster trading.

This isn’t surprising given the wait-and-see attitude that traders and institutions take before any significant Fed announcement.

And this one could be significant.


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It won’t be significant in terms of what will be, meaning the odds of a 25-basis point cut are close to 100%. It will be significant in terms of all the under the covers pillow talk at the Fed.

What will the vote count be for a cut? Who dissented? How will the dissenting votes be treated in terms of what those dissenters will say publicly? Are they generally hawkish or dovish and have their changed their general stance?

The so-called forward guidance that the Fed’s incorporated into its announcements will be parsed and parceled every which way to Sunday.

Capital is going to move on whatever it interprets will happen after hearing what the Fed says.

That movement won’t be based directly on what the Fed says. It will be based on what the psychology of investors will be down the road.

What will markets discount? What will they expect other traders and investors to do based on how they might interpret the Fed’s moves and guidance and other individual voices?

It’s going to be an interesting week of “positioning.”

I’m going to update your Capital Wave Forecast as necessary, based on how markets react.

The only thing I can tell you for now is this: If there’s not much to do, investors will remain mostly on the sidelines, and we’ll have a lackluster week.

But I have a feeling that there might be some fireworks if something out of the Fed is interpreted as coming out of left field.

Your next Capital Wave Forecast is going to be a lot more in-depth with more metrics and a clear forecast for where we’re going over the next quarter. All of that will be possible based on what happens this week.

Sincerely,


Shah

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