FOMC wrap

market vibes

“You have to just look out the window and see how your policies are affecting the economy.” Jay Powell (mood… “we’re on hold”)

The tone at the press conference was a little hawkish; no hurry to cut, no reason to hike. Banks are in good shape. Employment is solid. Data dependent is back. “We don’t know where neutral is but it’s lower than here.” In a way, no one had any questions worth asking and no one came away knowing more than they did yesterday.

CNBC’s post-FOMC wrap with Jeff Gundlach on risks: “Wall Street is re-traunching weak bonds like 2006. Once you start making triple-A rated securities out of triple-B rated securities, it gets dangerous. It will take time to become a problem, but once it starts, it grows. It’s a good time to be upgrading and careful.”

He said, “I like 30% cash, 50% longer-term bonds, 20% stocks. I don’t like stocks at these valuations. The CAPE ratio (current price divided by 10-year average earnings) is over 30. When Reagan was elected, it was under 10.”

Gundlach is from Palisades, Los Angeles. He said, “California is much worse than anyone knows. It really looks like World War II. It’s going to take many years for LA to recover.”

Next up stocks and NVidia, oil, bitcoin and gold with first notice day on Friday… and the vibe.