https://www.zerohedge.com/markets/twas-night-fed-day
" 'Twas the night before Fed Day, when all through the bourse,
Rate-cutters were stirring, ready to open the purse.The voters in Eccles were afraid of a stock bear,
But all had high hopes that the Santa Rally soon would be there."
Maybe it was being in Europe, with a particular shout-out to Zurich for putting me in a holiday mood. Academy also has our holiday party this week, which I’m looking forward to, though I’m not sure why I thought guest hosting Bloomberg TV at 6am the next morning would be a good idea. Or maybe it was the daunting task of needing to write about something that I didn’t feel passionate writing about (knowing that it would be about one out of a thousand Fed write-ups hitting your inbox in the next 48 hours didn’t help the motivation level). Or maybe, I was just jet lagged, lazy, and felt that we covered some of the groundwork in last weekend’s The Santa Rally Recipe.
If I was to do a serious report, in as few words as possible, I’d go with:
Market is pricing in a 95% probability – the Fed won’t disappoint.
Powell is as close to being a lame duck chair as we’ve seen, so nothing he says will carry much weight into the new year.
I think the market is still underpricing:
The level of coordination we will see between the Treasury, the Fed, and the admin.
The “out of the box” thinking we will see in terms of tools implemented and even the shaping of the Fed to try to achieve my interpretation of the stated goal of 3-3-3 (3% growth, 3% front-end yields, and 10-year bond yields with a 3 handle).
