The Fed interest rate decision today contained nothing that was new or surprising. Chairman Powell made it clear that there is little likelihood that rates will be increased in the next year but he noted that there is still 'slack' in the labor market which suggests a cut could possibly occur if there is further weakness.
Despite the lack of any significant news, the market saw a positive reaction to the news. Part of this was because there wasn't anything hawkish from the Fed and part of this was simply a relief to think about something other than whether tariffs will be delayed in the next few days.
There is no doubt that the Fed is market friendly and that will help to provide some underlying support should the price action deteriorate, but it is this tariff issue that is going to determine what this market does next.
At this point, it seems likely that we will not hear anything new on the tariff issue before the close on Friday. Goldman Sachs has stated that its "baseline remains that the U.S. will scrap - or delay and eventually scrap - the December 15 tariffs on $150 billion of U.S. imports from China and will roll back the September 1 tariffs on about $100 billion, in return for increased Chinese purchases of U.S. agricultural products".
If Goldman Sachs is correct there is very likely to be a strong positive market reaction. If they are wrong then we will see a spike down on the news. The market appears to be optimistic but that isn't much comfort if your money is on the line.
There just isn't any way to know what will happen and that is reflected in the price action. The indices are dancing around following the positive reaction to the Fed as market players try to position for the China news.
The only insight of any value right now is that betting on the outcome on tariffs is a roll of the dice. There is no way to have a trading edge. After the news there will be some volatility to trade but trying to predict what will happen is gambling not speculating.Have a good evening. I'll see you tomorrow