Today’s Log Entry

9/16/19 Monday

Before the weekend attack on Saudi oil production I had odds at better than 50/50 that the Fed would sound a hawkish tone, while cutting 25 bps; upsetting equity markets, gold (currently trading on prospects for lower-yields, as opposed to Armageddon) and bonds in the process. However, given the palpable geopolitical uncertainty the weekend wrought, my best guess, as I type, is that the fed will tilt dovish, while still cutting 25 bps; which could very well spark a notable rally in stocks.

The fact that stocks are trading lower today suggests that I’m either wrong in my near-term bullish assessment, or the market is just slow. Or, the fact that stocks really aren’t — under the circumstances — off all that much may suggest that I’m right, and that traders are just cautious in case another surprise (attack maybe) occurs between now and the Fed meeting.

Bottom line: Stocks are trading entirely on the prospects for stimulus at the moment, not on fundamentals (which are very suspect here). Not a market to fool with (unhedged, or undiversified) if you’re a thoughtful long-term investor…

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