What the heck was that?

Federal Reserve Chairman Jerome Powell, during Wednesday’s post-decision press conference, tried to make the case there wasn’t about to be a big series of rate cuts.

Powell said the Fed cut rates by a quarter-point to ensure against downside risks, support the economy and to support inflation. “We’re thinking of it in the nature of a mid-cycle adjustment to policy.”

Oof. Stocks instantly got hammered. Would this be one and done on rate cuts?

Read: How the Fed and Jerome Powell sent ‘a bit of a shock wave’ through financial markets

Then Powell said: “I said it’s not the beginning of a long series of rate cuts. I didn’t say it’s just one or anything like that.”

OK then. Helen Thomas’s Blonde Money calls Powell “the worst communicator we have ever seen” and says one of Powell’s deputies—Vice Chair Richard Clarida, Governor Lael Brainard, or New York Fed President John Williams—is likely to come out and clarify the last mid-cycle adjustments were on the order of 75 basis points.

“The press conference was a great example of how not to do one when you are cutting interest rates after more than 10 years,” added Salman Ahmed, chief investment strategist at Lombard Odier Investment Managers.

The Call of the Day goes to UBS, which says the U.S. dollar

DXY, +0.37%

 is still the king. “Historically the U.S. dollar has tended to weaken into precautionary (as opposed to recessionary) rate cuts and strengthen thereafter, and it appears that this scenario is playing out again. This is particularly the case as the fundamental arguments for dollar strength in the G10 remain in place: sizable carry advantage (amid low volatility) and positive growth differential.”


And in the stock market? The 1.1% drop in the S&P 500

SPX, -1.09%

 was equivalent to a price- to-earnings drop of 0.2 times, in line with pricing out a 25 basis point cut. UBS still sees the potential to rotate into some value cyclicals and out of expensive defense names, “particularly as further rate cuts may be shelved and factor valuations are near extremes,” the brokerage said. UBS also said emerging-market equities lose a tailwind.

The market

U.S. stock futures

YM00, +0.12%

ES00, +0.08%

NQ00, +0.15%

 nudged higher Thursday after the 333-point shellacking for the Dow Jones Industrial Average

DJIA, -1.23%

 .

Gold

GC00, -1.38%

 and oil

CL.1, -1.31%

 futures dropped while the dollar

DXY, +0.37%

 rose.

Europe stocks

SXXP, +0.34%

rose while Asian stocks

ADOW, -0.36%

dropped sharply.

The chart

Bank of America Merrill Lynch says this may be the most dovish Fed ever. Why? Because the bond market just doesn’t see a threat of inflation breaking out. This decline could be because of the Fed’s success in eradicating inflation concerns, the brokerage says.


The buzz

Earnings season plows on with results from General Motors

GM, -0.22%

 and Verizon Communications

VZ, -2.40%

 , the telecoms firm, among others. Lots of economic data on tap, most crucially the ISM manufacturing index for July. Jeff Bezos sold $1.8 billion worth of Amazon

AMZN, -1.67%

stock, filings show.

Random reads

Bill Gates is backing a microchip startup using light to speed up artificial intelligence processing.

Europe’s done a good job rebuilding forests.

A Pennsylvania man was freed after spending 21 years in prison for murder—a decade after the star witness confessed to the murder.

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2019-08-01