Broker Check

Rate Hikes to Rate Cuts

June 18, 2019

It has been a volatile month in the markets since our last blog post (up until the last 6 days). The S&P 500 swung downward 4.5%  heading into the month of June before finding some technical support around the indices 200 day moving average (a moving average that historically provides inflection points).   The worst of this volatility was marked by new rumors that the US government is digging into Big Tech companies (Google, Amazon, FB etc.) to see if new anti-trust legislation should be implemented against them threatening to either control or break them up. 

Such oversold conditions helped fuel a technical bounce from there as optimistic buyers stepped in to pick up securities that were seemingly on sale.  This technical bounce was also met with news that perhaps the Federal Reserve is looking at cutting rates a few times later this year.  Rate cuts are seen to benefit economic activity as it opens cheaper avenues for companies to expand their businesses.  Markets have since stabilized over the last week and a half in anticipation of the Federal Reserve’s meeting June 18th-19th.

Today’s market action was positive after news from the White House that the President and his top trade advisors are planning a prolonged meeting with China at this months G20 economic summit.  With so much anticipation around these upcoming macro events it is no surprise that the S&P 500 is coiled up and ready to move in either direction.  In situations such as these, we enjoy our ability to quickly manage our risk depending on what resolutions may or may not come to fruition.