We’ve been anticipating a massive stock market turning point for weeks. And it seems it finally arrived yesterday with the Federal Reserve’s interest rate meeting.
And now stocks are ready to march higher into the end of the year.
Yesterday, the Fed left interest rates unchanged. That was expected. But the upside surprise came during the central bank’s prepared statement and Board Chair Jerome Powell’s post-announcement press conference, both of which were remarkably dovish.
In its prepared statement, the Fed stuck to its usual script of “higher for longer.” But it also included several new comments about emerging weakness in the economy and the downside effects of interest rate hikes. According to JPMorgan’s AI sentiment analysis of the statement, it was the second-most dovish Fed statement of the past 12 months.
A Dovish Powell Ushers in a Stock Rally
Then, in the post-meeting presser, Powell donned his dovish hat.
The board chair kept talking about how rate hikes are working and how we’re seeing their effect in places like the housing market and demand for durable goods. He acknowledged the drop in inflation. And he welcomed the rise in Treasury yields and the tighter financial conditions that came with them.
He sounded like someone who is done hiking rates – and one who may be willing to cut them next year.
That’s why, in response to the press conference, the market started to price in more interest rate cuts for 2024.
Ahead of yesterday’s meeting, the market was pricing in just over two rate cuts in 2024. Now it’s expecting three cuts next year, meaning Powell was so dovish yesterday that he talked the market into pricing in an entire extra rate cut for 2024!
Why does that matter?
Because when the Fed guides the economy to a so-called “soft landing” – and cuts interest rates while avoiding a recession – stocks always rally.
Always – there are zero counter examples. When the Fed cuts rates while avoiding a recession, stocks rally every time.
This happened in the mid-1980s, in 1995 and in 1998.
Stocks rallied throughout the mid-1980s. They soared in 1995 and ‘96. And they had two of their best years ever in 1998 and ‘99 as they absolutely surged higher.
Therefore, history suggests that if the Fed cuts rates in 2024 and the economy avoids a recession, the stock market will likely soar into 2025.
The Final Word on the Fed’s Interest Rate Update
The “turning point” for that multi-year rally arrived yesterday with the Fed’s turn to a more dovish stance.
And that’s why, last night, we held an emergency broadcast about the state of the market, this turning point, and a potentially major stock catalyst set to arrive in less than a month.
That catalyst could shock the markets, create bountiful wealth for those prepared for it – and crush the portfolios of those who are unprepared.
Trust me. This is a turning point you need to learn about right now, especially if you currently own or are thinking about investing in Nvidia (NVDA).
