Today we are an hour and a half from a Fed decision and 52 days out from the May 11 start of the bottoming process. Most stocks and sectors, especially deep tech, are well above the 52-day average and more importantly the 52-day average is moving up and to the right.
I am constantly asked why, with all the FED activity, I am not bearish on the economy and the stock market. My answer can probably be made best by making an analogy, talking about the NASCAR restrictor plate. This plate, below the carburetor restricts the amount of air that can go in an engine. It seemed that method was most effective to hold down speeds from a safety standpoint.
To me the FED is not serious about inflation unless it restricts money supply, ie really tackle things that contribute to money supply, one being the FED balance sheet. The much admired Volker did exactly that, he controlled money supply and market interest rates did the job. Playing with the FED Funds rate as Powell is doing is like putting up a speed limit sign. All this does is control speeds where the Police Car is sitting, ie the FED Funds rate.