evening wrap, september 15

market vibes

Been down so long it looks like up to me. Richard Farina, 1966

Markets were generally higher in quiet trading in NY on Monday. Gold and S&Ps made new all-time highs. Silver closed at a new 14-year high. Copper made a new high since its plunge on July 30. Palladium and bitcoin were lower. Oil and the dollar wandered in narrowing ranges. Trump is in the UK tomorrow, meeting the King Wednesday, and Starmer Thursday. Should be interesting.

In the markets

Checking the period 1980 to present, there have been multiple instances when the FOMC cut interest rates while M2 and the S&P 500 were at or near all-time highs together (Grok). The two instances that best conform to conditions today were in 1995 and 1998. In both cases, the cuts were mid-cycle and intended to sustain growth during a period of slowing inflation.

When the FOMC cut .25 in July 1995, S&Ps rallied 28% in 12 months. Analogues are always imperfect, but the dollar was weak pre-cut and strengthened 5% post-cut that year. Gold traded a narrow range and did nothing for 5 months from July 95 to January 96. Then it topped out in February and fell 29% in 3 years.

A simple review of gold, dollars, and stocks from a high level is unfolding in hindsight tonight and thoughts on a higher power in the vibe.