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- More Volatility Will Cometh | FOMC Meeting Overview | 06-14-23 |
More Volatility Will Cometh | FOMC Meeting Overview | 06-14-23 |
Powell and the Federal Reserve give their take during the June FOMC meeting
Simplify Wall Street
June 15, 2023
More Volatility Will Cometh | FOMC Meeting Overview | 06-14-23
Powell and the Federal Reserve give their take during the June FOMC meeting.
After a good day of trading in our premium chat and various hedged statements made by the Federal Reserve, it has been a day full of activity.
We were able to catch a few winning trades this week utilizing options in $HOOD (+20%), $AMZN (+50%), and $SPX (+110%). I will cover my plan for the remainder of the month and into July/August, but this will only be available for premium members. A partial plan will be released to all members on Sunday, June 18th, 23.
Back to FOMC Statements
A few statements are essential to cover as this will give context to the what, when, and why questions revolving around the stock market.
Statements :
"The skip - I shouldn’t call it a skip - the decision.”
(Referring to the decision to pause rates in June)
Yes, we did not get a rate hike at this meeting, which is bullish, right? Well, in my opinion, this is a hedged response. If I were to be bullish, I would have needed to hear, “Yes, this is a skip, as we are seeing promising results.” So, when I hear the hesitation and cautiousness in pausing, I feel as if the market is walking on eggshells.
"Looking ahead, nearly all committee participants view it as likely that some further rate increases will be appropriate this year,"
So, by the time this statement was mentioned, the $S&P500 had already shredded roughly 50 points off the high of day trading down to 4380s from 4430s (/ES levels).
This is where the hedged response is reflected because if this is a pause now and resumes later, this pause is just prolonging potential volatility in the financial market. What if this pause hurts us long term, and we need to increase hikes above our .25 bps standard to .5? Is this an attempt to continue to profit off this un-telegraphed upside move in the S&P 500?
"It's reasonable; it's common sense to go a little slower,” Powell said. “It seemed to make obvious sense to moderate our rate hikes as we got closer to our destination.”
With these statements above, this slowly puts a high level of uncertainty that was not there 24 hours ago. This pause may complicate future CPI (Consumer Price Index) data.
Every action reacts, so what will the reaction be in months?
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