The first defensive move on the Fed, will be the ever popular Fed Speak, where they tell the public that Brexit will have limited effect on the US economy. They will then say they will use all the tools at their disposal to stem risk (backstop the market). Talk is cheap. It has worked for them in the past because the US investor is a trained animal and the Fed knows it. The difference here is it is a global event and Europe has already shown the political and business powers that they are done with all the BS and they want something new that will actual work for jobs and financial security.
through the indexes. Wall Street is expecting another leg lower as no solutions will be discussed until after the weekend by the EU and the world Feds
Held by Janet as he is ruining it for the BS story that she has been feeding the public for the last few years.
Wait until Europe closes and additional news comes in. They will sell down their risk on the US markets and then it will be interesting how the perma bulls spin it.
There is no doubt that this will take a few weeks, if not months to work out the Brexit decision, but keep in mind that the algos are still running the market. Just like they did with oil, they have a calculation on how low this will effect the US markets and if programming sees we are half way through this "correction" number, they will buy the dip as they have done for the last 8 years and average down from here. So there are two strategies they can achieve profits. First, sell on open, walk away and be satisfied that you caught this move that has been anticipated for years. Second, you can buy calls immediately at the closest strike and if they play their buy the dip game, you have protected your gain, where as if it moves lower, you can maximize your profit.
The people are fed up with the status quo and supporting the agenda for big business and bureaucrats.
The Brexit is being proclaimed the worst possible thing that can happen to England by the very people that it effects the most, ie, big business and political. The common citizen of England is fed up with seeing massive immigration, increased taxes and getting screwed. The hourly polls on Brexit are another propaganda tool of the establishment to "guide the herd", ie if you say it enough times, they may believe it.
No one knows if the actual vote will be legitimate, but unless it is a massive vote to stay in the EU, the turmoil will continue. What happens in the market should be volatile movements in equities, currencies and bonds as the hedges unwind and reposition. With the focus off Brexit, it is not back to Yellen's on again/off again rate hike, the continued downgrade of the US economy and the extreme valuations of the US stock market.
The media is now trying to paint oil stocks as a defensive trade. Defensive against what? Oil stocks are trading like it is $70 bbl oil. Cash flow is a point in time and as more rigs come back online and foreign oil is allowed to be pumped into inventory facilities and be counted by EIA, oil prices will go back towards $40 bbl.
World economies are predicting lower demand and production exemplified by increased fiscal stimulus in all countries except the US. Commodity economies are pumping record oil, storage facilities are full, demand is down. There is absolutely not a single reason, except for market manipulation, that oil or oil stocks should be up.
Nothing more. Bots at their best. They have the short interest book as part of their inputs and are programmed to understand the short pain point. Another disadvantage of the retail investor, but the SEC is to protect the interest of big money and the Fed.
Bonds are at record low yields while oil is down over 4%. Stock triple expiration tomorrow moved covering to today. Gold is off high as world markets realize, with the fed's message, that the US economy can not withstand a rate hike, that the economy is on the brink of a recession and running towards capital preservation plays like the low yield US treasuries is a setup for a big downdraft that will probably start overnight in Asia.
Momentum has changed to the sell side and although Asia and Europe are down about 10% the US market has barely moved. Look for markets to pick up selling as the days go on, oil continues lower, dollar higher and the buy the dip mentality disappears.
As much as we want to continue to paint a rosy picture, corporate profits are down, guidance is lower, employment has leveled off at a lower rate, GDP has been lowered and we cannot do much more for the economy with our limited tool kit. It is up to the government now to do their part with tax programs, regulatory adjustments and spending programs on infrastructure to jump start the economy. So while everyone is not only waiting for the Fed's rate hike, they are waiting for this government to do something about the economy and continue to melt stocks higher as the bond market and world markets are telling us we are in denial and in for a hard landing?
There is no way to predict what the markets' reaction is going to be to whatever the Fed pulls out of its orifice tomorrow. Everyone is squaring positions into what they expect will be a turbulent session tomorrow. Fed will probably not hike in front of Brexit, but leave July on the table. Oil will probably sell off as inventory reported comes in stronger then expected and dollar rallies on expected hike still on the table.
There is no one pushing the buy button. Its that time of day. What will be interesting is how all these funds under the thumb of the Federal Reserve are going to unwind all these SPY shares that the computers bought on their behalf.
This is the head fake buy the dip as the drift the SPY higher while buying gold and protection at the same time.
If that doesn't happen soon, the calculations as to the potential upside left verses downside risk will ensue and you will see gap down in prices into close to protect massive profits made over last 3 months.
Buy the dip has the market convinced that hedge is not necessary. You should see gap up as the afternoon moves forward with deeper selling
Market looks like it wants to break to the downside and gold may be the asset of choice to ride Brexit and Fed meeting
They may slam it in the afternoon to take all of that premium.