Republic Risk: A “Chicken Shack” Fed

The markets remain too focused on the Fed's next move - while largely ignoring the significant fiscal peril ahead. That's intentional - as equity markets act more as a hedge than a wealth generator.

Equity Storm Watch Is GREEN on the S&P 500 and RED on the Russell 2000

There won’t be any rate hike or cut today - but there will be plenty of questions for Fed Chair Jerome Powell about why inflation remains untamed. Bitcoin and Ethereum are retreating again - as is gold. There have been profit-taking after recent highs and obvious concerns that “higher for longer” interest rates negatively impact non-yielding assets. 

The Russell 2000’s RSI, MFI, MACD, and ADX are all negative, and we’re now seeing significant selling pressure build. Recall that higher rates tend to negatively impact this index. If it falls under its 50-day moving average, this could get ugly. But there still remains strength in the mega-cap sectors. I’d urge caution and watch the SPY, which still remains above its 20-day moving average, and selling pressure remains light.

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Dear Fellow Expat: 

I had to laugh at Barron’s coverage of Fed meeting expectations. 

The paper suggested that Fed Chair Jerome Powe…