Markets Flash Red After Fed's Goolsbee: Was the Post-Cut Rally a Trap?
Despite the ecstatic rallies around all assets, some notable divergences emerged across sectors in the Stock and global Markets.
Fed's Goolsbee, a dissenter of the recent 25 bps cut, came in hot throughout several rounds of interviews earlier this morning, warning about the damaging effect of pre-emptive "Front-Loaded" cuts from the Federal Reserve.
The first comments after FOMC Meetings are always essential for traders and investors to track, as they look to learn more about who voted, for what, and why.
This becomes particularly interesting around this point of the cycle, where inflation and employment balance risks for the world's largest economy.
In the past 30 minutes, all Markets that had rallied relentlessly have given up some of their strength, with a flash selloff in Gold to $4,300, Nasdaq falling to 2.00% on the session, the Dow Jones going negative after a strong open, while VIX (Stock Volatility Index) spiked up 8%.
A small dip-buying move is occurring, but the pace and volume of trades since 10:00 A.M. are indicative of something that could be brewing on the sidelines.
As I am writing this, the selloff is continuing with all Indexes reaching new session lows.
Broadcom got heavily targeted despite strong Q4 earnings, taking a 10% hit on the session.
Still, the move by Google's Chip production partner does not explain how widespread the selloff has become.
Concerning flows, but not too surprising: Reactions around asset classes had been similar to a dovish cue; however, some warnings could have been felt from the Dot Plot, and indications that not many ammunition points for cuts were left.
The cut just wasn't as dovish as one.
A reason why examining the US Dollar for indications of its continuation or reversal of descent could be a strong indication of Market flows as indicated in our post-FOMC reactions piece.
A look at the current Market Flows
The Dow Jones and S&P 500 are getting sold off very harshly.
A more detailed US Market Outlook will be releasing soon so stay logged in!
Cryptos are not surviving this
Global Markets are flashing all around
The move is widespread. And with US Treasuries and the US Dollar not rallying much, I wonder where the money is going.
Market volatility can make a fool out of everyone. Our very recent Gold analysis is now looking quite different.
Still, traders can find interesting levels to trade there, so go check it out.
Safe Trades!
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