Monday, September 16, 2024

Wild swings

We've seen some dramatic moves in the stock market recently, both bullish and bearish.  That sort of whipsaw can be tough to get a read on, and I'm not sure what to make of it myself.  The market seems a bit schizophrenic, frankly.

Commodities have been more clear-cut.  Gold made new all-time highs last week, and oil hit a 52-week low.  Each commodity's direction is obvious.

Oil won't fall forever, because the modern world is dependent on it, but it might fall a bit further yet.  I could see it potentially going to fifty or so before heading back up.  Low oil prices are a good time to buy oil-related stocks at a discount, so don't miss out.

Gold will continue climbing, because why shouldn't it?  Inflation hasn't stopped, nor has global de-dollarization, nor have central banks stopped buying gold.  All these factors and more conspire to push gold higher.

The elephant in the room, of course, is the Fed's meeting this week.  An interest rate cut is expected by pretty much everyone; the only question is how big the cut will be.  I personally think there's a non-trivial chance of no cut at all.  I think Jay Powell might do his "Lucy with the football" routine yet again.  If Powell's in a proxy war with the Bank of Japan and the European Central Bank, as some commentators believe, then it's not time to cut rates yet.  Not until the opponents cry uncle good and hard.

Finally, there's the fact that this is September, a historically bad month for stocks.  If there's going to be a crash this calendar year, then September and October are the best bets.  A Fed surprise this week might just be the trigger.

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