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John Paulson.Rob Kim / Getty ImagesJohn Paulson will sell his stocks and buy gold if Kamala Harris wins the presidency.The Trump-supporting hedge fund billionaire criticized Harris’ tax plans on a Fox Business segment.Paulson said a proposed tax on unrealized gains would “cause mass selling of almost everything.”Billionaire hedge fund manager and Trump donor John Paulson told Fox Business that he will sell his stocks if Kamala Harris wins the presidency in November.”I’d go into cash and I’d go into gold because I think the uncertainty regarding the plans they outlined would create a lot of uncertainty in the markets and likely lower markets,” Paulson said on “The Claman Countdown.”Paulson was particularly focused on Harris’ proposal to levy a 25% tax on unrealized gains for individuals worth more than $100 million. He says such a measure could trigger major asset-dumping across the economy, and broader catastrophe for markets.”If they do implement a 25% tax on unrealized gains, that would cause mass selling of almost everything: stocks, bonds, homes, art,” Paulson said. “I think it would result in a crash in the markets and an immediate, pretty quick recession.”Despite Paulson’s gloomy view of the policy, the specifics of Harris’ proposal have not yet been confirmed. Kent Smetters, the faculty director of the Penn Wharton Budget Model, told Business Insider recently that he’s only been able to confirm two firm policies.The first is a bump up in corporate tax from 21% to 28%, and the second is an increase to the top rate for long-term capital gains to 28% for those making above $1 million. Much of the rest is hearsay based on media discussions with sources or a belief that she will take on Biden policies, he noted.Meanwhile, former president Donald Trump has indicated that he would extend the Tax Cut and Jobs Act, which is set to expire in 2025. The legislation lowered the corporate tax to 21%, and Paulson characterized it as “very successful.”Not every wealthy taxpayer is siding with Trump.Billionaire Mark Cuban took to X, formerly Twitter, to compare how businesses would do between Harris’ tax policy and Trump’s plans for broad-sweeping tariffs, concluding that Harris would offer more in after-tax profit.Further, many on Wall Street have scrutinized Trump’s tariff idea, fearing it could spark higher inflation and trigger trade wars. The Republican candidate has pledged to apply 10% tariffs on all US trade, and even suggested replacing the income tax with duties.Paulson sees tariffs as an effective strategy, telling Fox Business that it would be a powerful way to boost revenue.Read the original article on Business Insider Continue reading →

This is The Takeaway from today’s Morning Brief, which you can sign up to receive in your inbox every morning along with:Gold might be hitting record highs, but silver is starting to turn investors’ heads once again.The metal — at once precious and industrial — has surged for four straight days, poking above $31 per ounce for the first time since July.While the 10% gain this week is already the best since the early pandemic days of August 2020 — and is enough to secure a two-month high — investors likely have their sights set much higher.There are a few reasons why the second-place metal has potential. First, silver has slightly outperformed gold this year, but gold prices are still elevated with respect to silver on a historical basis when looking at the so-called gold-silver ratio.When the multiple of gold to silver reaches 80, many investors will look for buying opportunities in silver, betting that the ratio will mean revert. Currently, it stands at 84 but was above 90 only weeks ago as gold was surging. According to DataTrek’s Nicholas Colas, the historical average of the ratio since 1990 is 70, which means silver has room to run long-term versus gold.Technical analysis of silver prices also reveals long-term pent-up bullish potential, and the two looming peaks in silver’s history at about $50 per ounce could act as magnets for a breakout.Silver prices surged and shook the investing world in 1980 when Nelson Bunker Hunt, William Herbert Hunt, and Lamar Hunt attempted to corner the market on silver. The Hunt Brothers’ market manipulation scheme succeeded in inflating prices by 700% after they acquired about one-third of the world’s silver supply.The trade ended in tears for the brothers, but the price target had been set.After plummeting to $3 in the 1990s, silver mounted another rally as the global financial crisis kicked into high gear in the late oughts.Amid the QE 1 and 2 boom years, silver futures hit another peak just shy of $50 per ounce in April 2011 — an appreciation of nearly 170% over the prior year.Since that second trip to $50, the price again fell and has rallied in fits and starts. The pandemic sparked a rally in 2020 that took silver to $30, and this year, it’s managed to cross the $32 mark.According to Goldman Sachs, $32 is the big level to watch for silver, which the bank said is “on the verge of a multi-month breakout.” The bank also noted that options on the iShares Silver Trust (SLV) had one of the biggest volume days in years last Friday.The bank cited Federal Reserve monetary policy on the verge of its first rate cut in years. But the real appeal may lie with the evolving demand for artificial intelligence, as silver is critical for chip fabrication. Silver investors will be closely monitoring how chip demand evolves this earnings season.Yet another market narrative about Fed rates and AI.morning brief imageClick here for the latest stock market news and in-depth analysis, including events that move stocksRead the latest financial and business news from Yahoo Finance Continue reading →

US stocks were little changed on Wednesday as investors braced for the Federal Reserve’s long-awaited policy decision, with the market still divided on the size of the expected rate cut.The tech-heavy Nasdaq Composite (^IXIC) rose about 0.1%. The S&P 500 (^GSPC) was just above the flat line, while the Dow Jones Industrial Average (^DJI) slipped 0.1%.Stocks are ticking over as the market waits to find out how aggressive the Fed will be when it makes its first US interest rate cut since 2020 at the end of its meeting later Wednesday.The significant policy shift is widely expected, given growing signs that the central bank has managed to cool inflation without severe harm to the economy. But investors are still guessing at whether hopes for a 0.5% cut will be fulfilled or the historic pattern of 0.25% moves will repeat itself.Read more: Fed predictions for 2024: What experts say about the possibility of a rate cutIn recent days, traders have stepped up bets on a bigger cut even after Fed officials earlier in September flagged they were more likely to trim the benchmark rate by 25 basis points. As of Wednesday morning, fed funds futures were pricing in a better than 60% chance the Fed goes large, up from just 15% odds a week ago.Wall Street sees stock, bond, and currency markets as vulnerable to swings in the immediate aftermath of the Fed’s decision, seen as the least predictable in years.Intense focus is also on the Fed’s new interest rate projections, an indication of how many rate cuts officials expect to see in the rest of 2024 and in 2025. The so-called dot plot will come when the Fed releases its policy decision at 2 p.m. ET.Meanwhile, investors absorbed developments in the tech sector. Microsoft (MSFT) and BlackRock (BLK) are teaming up on an effort to raise $30 billion to build out AI infrastructure, while Google parent Alphabet (GOOG, GOOGL) won its bid to overturn a $1.7 billion EU antitrust fine related to digital ads.Live4 updatesWed, September 18, 2024 at 9:32 AM EDTStocks waver at the openStocks were little changed at the open on Wednesday as investors patiently await the Federal Reserve’s next monetary policy decision at 2 p.m. ET.As debate swirls whether the Fed will cut interest rates by 25 or 50 basis points, the three major indexes appeared to be in wait-and-see mode.Wed, September 18, 2024 at 8:57 AM EDTHousing starts jumped in August amid declining mortgage ratesNew residential construction increased in August as mortgage rates continued their decline.Housing starts rose 9.6% from the previous month to a seasonally adjusted annual pace of 1.356 million units, according to data from the Census Bureau released Wednesday. Single-family housing starts soared 15.8% to a seasonally adjusted annual pace of 992,000.The data comes as homebuilders feel more confident about the housing market. Mortgage rates are at their lowest level in over a year. Rates have been on a downward trend recently, with investors expecting the Fed to announce an interest-rate cut at the conclusion of its policy meeting later Wednesday.The data showed that building permits for single family homes rose to a pace of 967,000, a 2.8% increase from July’s revised figure of 941,000. Meanwhile, permits for multifamily came in at a rate of 451,000 in August.Wed, September 18, 2024 at 8:52 AM EDTDimon says the rate cut debate is overrated JPMorgan Chase (JPM) CEO Jamie Dimon told a conference on Tuesday that any interest rate move by the Fed would “not going to be earth-shattering,” arguing that “it’s a minor thing when the Fed’s raising rates and lowering rates because underneath that there’s a real economy.”The comments follow Dimon telling CNBC last month that when it comes to the debate about how much the Fed cuts interest rates, “I don’t think it matters as much as other people think. You know, the rate effect itself isn’t that critical.”Wed, September 18, 2024 at 8:45 AM EDT’The Fed cutting by 50 basis points is a real possibility’From Yahoo Finance’s Jennifer Schonberger:”The Federal Reserve is widely expected to cut interest rates for the first time in four years Wednesday and outline the path for future rate cuts.Investors have been hoping for a larger half-percentage-point cut versus a quarter-point cut. Traders, in recent days, have increased their wager that the central bank will cut by a deeper 50 basis points. Wednesday morning, fed funds futures were pricing in a better than 60% chance the Fed cuts by 50 basis points, up from just 15% odds a week ago.’The Fed cutting by 50 basis points is a real possibility,’ said Wilmer Stith, a bond trader for Wilmington Trust, who just last week thought it was more likely the central bank could cut by 25 basis points. He’s on the fence, though, as to whether it actually happens.”Read the full story > Continue reading →

I want to start this article with a little background about Elliott Wave analysis, and begin with a quote from Paul Tudor Jones, one of the most successful money managers of all time:

“I attribute a lot of my success to Elliot Wave Theory. It allows one to create incredibly favorable risk reward opportunities”

Back in the 1930’s, an accountant named Ralph Nelson Elliott identified that markets represent unconscious, non-rational reactions which follow a repeating fractal pattern, which means they move in variably self-similar patterns at all degree of trends.  This repeating fractal pattern represents overall societal sentiment which is governed by the natural law of the universe as represented through Fibonacci Mathematics.  

Now, to be clear, people often mistake what I am saying as meaning that the patterns are what drive society.  But, the truth is that the patterns represent the social mood of society en masse, and it is the societal sentiment that causes these fractal patterns we see in the market.

Most specifically, Elliott theorized that public sentiment and mass psychology move in 5 waves within a primary trend, and 3 waves within a counter-trend.  

Once a 5 wave move in public sentiment has completed, then it is time for the subconscious sentiment of the public to shift in the opposite direction, which is simply the natural cycle within the human psyche, and not the operative effect of some form of “news.”

Also, take note that waves 1, 3 and 5 move in the direction of the general trend, and waves 2 and 4 are counter-trend moves.  Moreover, take note that waves 1, 3 and 5 further break down into 5-wave structures – which I show as an example within the 3rd wave –  whereas the corrective, counter-trend moves of waves 2 and 4 break down into 3-wave structures.

Now, I want you to take note that the segment one would want to trade is the heart of a 3rd wave, as they are the strongest segments of a rally in equities.  And, while 3rd waves are still very strong in metals, their 5th waves are even stronger.

So, as an investor, you want to be layering into a market as a 3rd wave is about to begin.  If you look at the chart above, the set up you are seeking is a i-ii, 1-2 structure, wherein you can move into the market during the wave 2 pullback, so you are prepared for the wave 3 of iii.

Silver is now developing a structure within its wave 2. The only question I have is if silver has begun its 3rd wave, or if there is one more drop to complete its wave 2 before the heart of the 3rd wave begins in earnest.

I will not bore you with the mathematical details as to how I calculated the resistance, but 31.73 is coming up as a very strong point for me over the coming week. Unless silver is able to blow through that resistance, we have a set up in place that can take silver down quite strongly over the coming weeks towards the 23.75-26.72 region to complete its 2nd wave. 

Of course, if silver can blow through the 31.73 region and continue through 33.35, then we are on our way to our next target in the 37.25-40 region, and also on our way to much higher targets after another smaller pullback from that higher target region.

Taking a step back, I want this to be a lesson to anyone utilizing Elliott Wave analysis to its most powerful end.  You must be as objective as possible when analyzing the charts you are trading.  While it is so easy to simply just view the path you would most prefer due to a bias you have derived, whether that be due to having money invested in that particular direction or from some fundamental perspective, it is absolutely imperative to always be analyzing the other side of the market to understand where and how you can be wrong in your assessment.  And, when there are levels that line up in an almost perfectly overlapping manner, you must take notice and recognize it as more than just a small probability that the market is presenting.

So, I would be watching your positions in silver over the coming week or two, as one more decline can still take shape before we are ready for the major break out. Continue reading →

(Bloomberg) — Stocks struggled near their all-time highs ahead of the Federal Reserve rate decision, with traders split on the size of a central bank cut.Most Read from BloombergThe S&P 500 was little changed after briefly crossing the threshold of its record amid a surprise increase in US retail sales. Treasury yields edged up, with shorter maturities leading the move. The market-implied odds that policymakers announce a 50-basis-point rate reduction on Wednesday were around 55%. Traders have fully priced in a full quarter-point worth of easing.A survey conducted by 22V Research showed that expectations for the market reaction to the Fed decision are dependent on expectations for the size of the cut. Investors who expect a 25 basis-point cut are split on whether that cut will deliver a “risk-on” or “risk-off” reaction. Investors who expect a 50 basis-point reduction cut think a smaller cut will have a “risk-off” market reaction.The Fed will either cut 50 basis points or opt for a 25 basis-point reduction, but signal that they will be more aggressive going forward, according to Matt Maley at Miller Tabak.Still, he says, that does not guarantee that the stock market and/or bond market will rally in a meaningful way. Maley says the Fed will likely try to convey that a more dovish stance is not seen as something that means they’re suddenly worried about an imminent recession.“Therefore, given that the stock market is approaching overbought territory, we could still get a ‘sell the news’ reaction to the Fed this week,” he added.The S&P 500 hovered near 5,630. The Nasdaq 100 was little changed. The Dow Jones Industrial Average fluctuated. The Russell 2000 of smaller firms gained 0.8%. Treasury 10-year yields advanced three basis points to 3.65%. The dollar rose.Right or wrong, market expectations were already shifting toward a 50 basis point Fed cut this week, according to Chris Larkin at E*Trade from Morgan Stanley.“The stronger-than-anticipated headline retail sales number seemed to support that outlook, but the report’s fine print presented a more mixed picture,” Larkin said. “This data isn’t going to decide the issue for the Fed, one way or the other.”That said, we’re not out of the woods quite yet, according to Bret Kenwell at eToro.“There are reasons to be concerned about the labor market, and while the consumer is holding on enough to beat economists’ expectations, the results are not necessarily pointing to a consumer that is thriving,” he said.The US economy remains on track for a soft landing, and the recent economic data are consistent with our view that the recession fears that triggered the early August selloff were overdone, according to Solita Marcelli at UBS Global Wealth Management.“While we believe equity gains will broaden out, we also think there is room for growth stocks, in particular technology stocks, to rise further,” she said.Marcelli also noted that while Fed rate cuts in non-recessionary periods have historically been favorable for equities overall, they also make growth stocks more attractive as lower rates increase the present value of these companies’ future cash flows.Corporate Highlights:Microsoft Corp. raised its quarterly dividend 10% and unveiled a new $60 billion stock-buyback program, matching the size of a repurchase plan three years ago.Intel Corp. made a raft of announcements, spurring optimism that the chipmaker’s turnaround plan is starting to bear fruit.Newmont Corp., the world’s biggest gold miner, said it’s on track to raise $2 billion — if not more — from selling smaller mines and development projects.Reckitt Benckiser Group Plc has started early discussions with some of the potential suitors for its homecare assets, which could fetch more than £6 billion ($7.9 billion) in a deal, according to people familiar with the matter.Continental AG is pushing ahead with preparations for a separation of its struggling car parts business, even as it grapples with recalls related to faulty braking systems it supplied, according to people familiar with the matter.Key events this week:Eurozone CPI, WednesdayFed rate decision, WednesdayUK rate decision, ThursdayUS US Conf. Board leading index, initial jobless claims, US existing home sales, ThursdayFedEx earnings, ThursdayJapan rate decision, FridayEurozone consumer confidence, FridaySome of the main moves in markets:StocksThe S&P 500 was little changed as of 1:28 p.m. New York timeThe Nasdaq 100 was little changedThe Dow Jones Industrial Average was little changedThe MSCI World Index was little changedThe Russell 2000 Index rose 0.8%CurrenciesThe Bloomberg Dollar Spot Index rose 0.2%The euro fell 0.1% to $1.1117The British pound fell 0.5% to $1.3156The Japanese yen fell 0.9% to 141.89 per dollarCryptocurrenciesBitcoin rose 5.7% to $60,948.16Ether rose 4.4% to $2,374.08BondsThe yield on 10-year Treasuries advanced three basis points to 3.64%Germany’s 10-year yield advanced two basis points to 2.14%Britain’s 10-year yield advanced one basis point to 3.77%CommoditiesWest Texas Intermediate crude rose 2.2% to $71.60 a barrelSpot gold fell 0.6% to $2,565.93 an ounceThis story was produced with the assistance of Bloomberg Automation.Most Read from Bloomberg Businessweek©2024 Bloomberg L.P. Continue reading →

“The Fed should act in the way that the data indicates that they should act. Period,” said Rep. Patrick McHenry, R-N.C., chair of the House Financial Services Committee.
Democratic Sens. Elizabeth Warren of Massachusetts, John Hickenlooper of Colorado and Sheldon Whitehouse of Rhode Island have called for the Fed to cut its benchmark rate by three-quarters of a percentage point, which is higher than the most aggressive market expectations.
Former President Donald Trump said in an August press conference that he believes he should get a say on monetary policy if he wins in November.

U.S. Rep. Patrick McHenry, R-N.C., speaks to members of the media outside the office of U.S. House Speaker Kevin McCarthy, R-Calif., at the U.S. Capitol in Washington on Oct. 3, 2023.
Mandel Ngan | AFP | Getty Images

Rep. Patrick McHenry, R-N.C., sharply criticized other politicians on Tuesday for making public comments about what the Federal Reserve should do with its interest rate policy.
McHenry, the outgoing chair of the House Financial Services Committee, said it was an ‘”outrage” that some politicians are publicly lobbying the central bank about rate cuts.

“The outrage to me is … for instance, if you’re on the right, you say the Fed should be independent, except I think right now they should do this. And on the left, the same,” said McHenry, who is retiring from Congress at the end of this term.
“Senators that are trying to direct the Fed on rate policy are really demeaning their role. … They’re demeaning their role as a United States Senator,” he added.
McHenry’s comments came one day before the U.S. central bank is widely expected to start cutting interest rates for the first time since 2020. Coming in the middle of a presidential election cycle, the change in Fed policy has stirred speculation as to whether the central bank would be influenced by political considerations. Chair Jerome Powell, first appointed by Trump and reappointed by President Joe Biden, has repeatedly denied that is a factor.
On Monday, Democratic Sens. Elizabeth Warren of Massachusetts, John Hickenlooper of Colorado and Sheldon Whitehouse of Rhode Island called for the Fed to cut its benchmark lending rate by 0.75 percentage points, which is higher than the most aggressive market expectations. Warren and Whitehouse are both running for reelection in November, while Hickenlooper’s term ends in 2026.
Republicans who have weighed in include former President Trump, who said in an August press conference that he believes he should get a say on monetary policy if he wins in November. Sen. Mike Lee, R-Utah, also introduced a bill earlier this year that would abolish the Fed.

When asked about Trump’s remarks, McHenry said “all presidents think they should give an input” but that the central bankers should ignore statements from politicians.
“The Fed should act in the way that the data indicates that they should act. Period,” McHenry said.
The remarks came at a conference hosted by Georgetown University’s Psaros Center for Financial Markets and Policy.

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US stock futures rose on Tuesday, with techs leading the advance in the wait for fresh retail sales data and the start of a Federal Reserve meeting pivotal to an interest-rate cut.Dow Jones Industrial Average futures (YM=F) moved up roughly 0.2%, coming off a record-high close for the blue-chip index. S&P 500 futures (ES=F) added 0.3%, while contracts on the tech-heavy Nasdaq 100 (NQ=F) put on 0.4%.Stocks are setting up for gains as the odds on a 0.5% Fed rate cut creep higher, with just one day to go before its monetary policy decision. The central bank’s two-day meeting, which begins Tuesday, is prevailingly expected to bring the first easing in rates since early 2020.Investors are looking to an August reading on retail sales due later for insight into the health of the consumer and economy, the last piece of data that could factor into the Fed’s thinking. A softer-than-expected print could reinforce bets on a substantial rate cut rather than a quarter-point move.Read more: Fed predictions for 2024: What experts say about the possibility of a rate cutRight now, the rate-path debate now is focused on the chance that the bigger cut could prompt panic in markets. At the same time, some on Wall Street suggest the smaller move could also disappoint and spark concern.As of Tuesday, traders see odds of 65% on a 50 basis point reduction in rates, compared with 62% a day ago. The chances of a 25 basis point cut stand at 35%, per the CME FedWatch tool.Meanwhile, Intel’s (INTC) shares popped after its foundry secured Amazon as a multibillion-dollar customer for AI chips. Also helping revive faith in battered tech stocks was Microsoft’s (MSFT) new plan to buy back up to $60 billion in shares and a 10% boost to its dividend. Continue reading →

(Reuters) – U.S. stock index futures edged higher as investors awaited a batch of economic data and clung to hopes the Federal Reserve would deliver a supersized interest-rate cut at its monetary policy meeting, which starts on Tuesday.After a choppy start to the week, the S&P 500 ended its sixth straight session higher and near a record high on Monday, helped by Financials and Energy stocks.The Dow also closed at a record high. However, the Nasdaq ended the session lower as investors rotated out of tech stocks, which have led much of this year’s rally.Microsoft rose nearly 2.0% in premarket trading on the day after the AI-frontrunner’s board approved a new $60-billion share buyback program and hiked its quarterly dividend by 10%.Among growth stocks, Alphabet and Tesla added 0.63% and 0.57%, respectively, while Nvidia inched up 0.30%. The yield on two-year Treasury bonds hovered near two-year lows. [US/]At 05:35 a.m. ET, Dow E-minis were up 84 points, or 0.20%, S&P 500 E-minis were up 17.75 points, or 0.31% and Nasdaq 100 E-minis were up 99 points, or 0.51%.In economic data, reports on industrial production and retail sales for August, expected later in the day, could influence investor expectations on the size of the central bank’s first interest-rate cut this year.Fed officials are slated to kickstart a two-day meeting and traders are betting on a 67% probability the world’s most influential central bank will decide to lower borrowing costs by a bigger 50 basis points, according to the CME Group’s FedWatch Tool.Odds favoring a smaller 25 bps reduction have slipped to 33% from 66% a week earlier, as investors focused on remarks from a former policymaker supporting an outsized move and signs of a cooling labor market, among other indicators.However, Mohit Kumar, chief Europe economist at Jefferies, said in a note that a “‘safer’ approach for (Fed Chair Jerome) Powell would be to cut by 25bp”, but keep the side door open for a 50 bps cut at later meetings. “Proximity of (U.S.) elections also imply that it would be a more politically neutral stance.”September has historically been weak for U.S. equities, with the benchmark S&P 500 down about 1.20% for the month on an average since 1928. The index has lost about 0.30% so far this September.Still, a survey of BofA fund managers showed global investor sentiment improved in September 2024 for the first time since June on optimism around a soft landing and rate cuts by the U.S. Federal Reserve.Among other movers, Intel jumped 7.0% after signing up Amazon.com’s cloud services unit as a customer to make custom artificial-intelligence chips.Viasat dropped 5.0% after brokerage J.P.Morgan downgraded it to “neutral” from “overweight”.(Reporting by Johann M Cherian in Bengaluru; Editing by Pooja Desai) Continue reading →

[embedded content]Silver To Outperform Gold 4 To 1 As New Monetary System Emerges ‘In Next 3 Years’ | https://www.themorganreport.com
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SusanneBI wrote about the inflation report that moved markets last week, and now, all eyes are on the Fed. Typically, the Fed cuts rates when there is a problem or when something is seriously wrong with the economy. Therefore, lowering interest rates is often associated with negative economic factors and potential downside for stocks. However, the economy remains resilient, and the Fed will likely cut rates on September 18th. We’ve been trapped in a relatively high interest rate environment for a long time. Now that inflation has decreased considerably and the job market has weakened, it’s time to cut rates. Moreover, housing, manufacturing, and other segments of the economy are showing signs of substantial weakness. While the near-term volatility could persist, a more accessible monetary stance should lead to improved growth and increased liquidity, a highly constructive dynamic for high-quality stocks and other risk assets. Furthermore, the Fed could cut by 50 Bps to kick things off, which markets should welcome. Also, corporate earnings remain healthy, and despite the potential temporary growth slowdown in AI and other segments, we could see improving and better-than-expected earnings in future quarters. Valuations, while elevated, are not nearing any extremes, implying there could be substantial upside in the current bull market. Due to this constructive dynamic, I am keeping my S&P 500 “SPX” (SP500) year-end target at 6,200. The Technical Image – A Triple Top? SPX (stockcharts.com ) “There are no such things as triple tops.” That’s how the trading saying goes. Incidentally, we see the SPX approaching what could be a triple top, but there is a high probability that the SPX will break out. We witnessed a highly constructive technical correction in July and early August. This correction lowered the SPX by about 10% to roughly the 5,200 support level. Moreover, the SPX successfully re-tested the support, only dropping to 5,400 recently. Now, SPX appears set up for another move higher here. Data This Week – The FOMC Approaches Data (investing.com ) While there are several crucial data points this week, it’s all about the FOMC and the rate cut. The million-dollar question, of course, is, will the Fed cut by a modest 25 Bps or go big with a 50 Bps jump cut? The market would very likely react more favorably to the more significant 50 Bps cut. However, the essential element is that the Fed is on the right path to a more accessible monetary environment. Therefore, while we may see an adverse knee-jerk reaction to a 25 Bps cut, the selling will likely be short-lived, and a post-FOMC pullback will likely turn into a buying opportunity in the coming days. Rates Likely Going Lower Quickly Rate probabilities (CMEGroup.com ) Rates will likely be much lower by early next year. There is about an 80% probability that the funds rate will be around 3.75-4% or lower by the end of January 2025. This is a vast difference from the current 5.25-5.5% benchmark rate environment. Therefore, we could see about 150-200 Bps worth of cuts in the next several months. I want everyone to realize how significant the initial rate reduction phase could be. The Fed may take a shock-and-awe approach, including potential jumbo 50 Bps cuts in the mix as it moves toward an appropriate rate policy. Also, 4% is not the floor. Instead, it’s likely only the beginning. The benchmark could be around 3% by around mid-year 2025, and we could see lower interest rates after that. It seems like every time the Fed embarks on an easing cycle expectations are that it may end half way right after things normalize. In reality, monetary cycles typically don’t stop half or part of the way. They go “all the way.” The Fed may tolerate higher inflation to increase growth and improve the labor market. Also, inflation could have a lagging effect and continue lower even as the Fed transitions to a lower interest rate policy. Inflation could also increase gradually as growth may be sluggish in the near future. Thus, we could see much more easing and potential future QE and other stimulus programs, providing backstops and liquidity to markets in the coming years. Earnings Season Approaches It seems like earnings just ended. Nonetheless, earnings season approaches again. The recent earnings season was primarily positive, and much of the guidance was also solid. Therefore, we could see outperformance when big reports start in early October. Big banks, including JPMorgan (JPM) will report on October 11th, and we should see many bellwether stocks reporting around this time frame. This dynamic creates a favorable catalyst for stocks to move higher into the best time of the year, the holiday season, and year-end. The Valuation Perspective P/E valuations (WSJ.com) The S&P 500 trades at a forward P/E ratio (non-GAAP) of approximately 22-23. While this may seem relatively expensive historically, it may be inexpensive in the context of entering an easing monetary cycle in a resilient and stable economic atmosphere. Also, the growth image can improve, and earnings may increase more than expected, implying that the forward (2025) P/E ratio may be below 22 here. Also, the Nasdaq 100’s forward P/E ratio is around 29, but it may be around 28 or lower relative to 2025’s earnings, which is a slightly more bullish case outcome. Considering the AI growth potential and upcoming monetary environment,28-30 times forward earnings may not be too expensive for the world’s best tech companies. The S&P 500’s Shiller P/E ratio is around 36 now. While historically, this is relatively high, the all-time high was around 44. Also, the Shiller P/E ratio could move to an ATH in this bull market cycle. This dynamic implies that earnings, valuations, and stock prices could continue to appreciate from here. Due to the solid technical and fundamental dynamic, I am leaving my SPX year-end target at 6,200. Continue reading →

[embedded content]The Silver Surge: David Morgan’s Insights on Market Trends | https://www.themorganreport.com
In this episode, David Morgan from The Morgan Report discusses a wide range of topics including the escalation of the Russia-Ukraine conflict, NATO’s involvement, and the broader implications for the U.S. economy. He shares his views on geopolitical tensions, particularly regarding China and Taiwan, and explores the potential for economic shifts depending on the global political landscape. David provides an in-depth analysis of the precious metals market, focusing on gold and silver, and highlights the increasing investment by Chinese citizens in physical silver. The discussion also delves into the advantages of investing in mining and royalty companies, the impacts of inflation on markets, and the unforeseen potential in the oil industry. David caps off the conversation by introducing his upcoming documentary ‘Silver Sunrise,’ which aims to scrutinize the current monetary system and explore sustainable solutions for the future.
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