It was yet another broadly subdued day for the US equity market, with a trading range of just 10pts. The day did end surprisingly bullish though, with the sp' coming within just 2pts (0.1%) of the March high of 2400.98. Market volatility remains extremely low, and its notable we saw a print of 9.99 in pre-market. The 9s are becoming more regular. It has to be asked if the 8s or 7s will be seen late this summer?
Where we're going...
As earnings and the econ-data continue to come in 'reasonable, the fed is becoming more bold. Today we saw Fed vice chair Fischer argue how the fed doesn't need any set of fixed rules. The fed will 'better decide by commitee'.
Oh yeah, cause that worked out so well in 2000 and 2007, right?
This increase in confidence is merely another sign that we are approaching the next bubble top. To be clear, that still looks another year away, not least as other world markets are increasingly strong.
No one should doubt the fed are 100% reactive, they've never had the sense to attempt to pre-empt a looming collapse or hysteria-boom.
Rates are set to be raised in June, and probably another 4-6 times before things max out. Further, the fed will even start reducing the balance sheet, but by the time the next recession appears, it will likely still total $3.5trn.
The fed is indeed now of the view that where its going, it doesn't need any rules...
.. and that is perhaps one of the greatest endings to any movie.
Here in the metropolis...
This market remains no fun fairground ride for those still trying to short.
Goodnight from London
*the weekend post will appear Sat'12pm, and will detail the US monthly indexes