Since the beginning of the year the stock markets, especially Wall Street, have been rising steadily with small interruptions – and this in spite of the strong deterioration in economic data. The main reason for the turnaround in the stock markets after the sale in December is the changed wording of the Fed: Powell’s “autopilot” in the balance sheet reduction became the termination of precisely this balance sheet reduction, and the previously announced interest rate hikes were also “cashed in” – at the last FOMC press conference by Jerome Powell, the head of the Fed announced his willingness to lower interest rates. In other words, the Fed has gone from being an opponent (“autopilot”) to a friend, the Fed-Put seems to be back.
Today Jerome Powell will reflect the current position of the Fed – and one of the key points for the Fed’s change was uncertainty over trade war. Now there is a “ceasefire” between the US and China, but uncertainty remains.
On the other hand it is difficult for the Fed to assess the situation of the US economy: US labour market data weak in May, good again in June. So what will the Fed do? First of all, an evaluation by Jochen Stanzl (german):
Chart-wise the US indices are now at a decisive milestone! Either we see a top formation with falling prices, or a breakout with a buy-signal. Lars Erichsen first looks at the situation on Wall Street’s stock markets – and focuses especially on a day when the positive sentiment could tip over (german):