Is the Fed Afraid of a Recession?

The Fed has spoken: release the doves.

Rates remain unchanged, Jerome Powell declared Wednesday, and we shouldn’t expect any additional hikes this year. The Fed also said it would end runoff of its $4 trillion balance sheet in September, MarketWatch reports, and lowered full-year GDP expectations to 2.1% from 2.3%.

“Conventional wisdom held it would be difficult for the Federal Reserve to deliver a second dovish surprise in as many meetings,” Bloomberg notes. “It was wrong, and the equity market didn’t quite know what to make of it.”

The averages spiked briefly during the 2 p.m. press conference, only to give back the gains into the closing bell. When the dust cleared, the Dow was down almost 150 points, while the S&P finished lowered by 0.3%. Only the Nasdaq Composite closed in the green.

Meanwhile, precious metals are rallying. Gold is extending its gains this morning, rising more than 1% toward its March highs.

Here’s a thought: Did the Federal Reserve hike rates in 2018 so it could lower rates this year if a recession hits?

All the blubbering over global growth concerns is starting to spill over now that the Fed has abruptly shifted away from any long-term plans to tighten and raise.

“The irony is the Fed’s determination last year to get ahead of inflationary pressures has created a scenario in which the central bank now has room to be accommodative, if the global economy’s soft patch becomes an outright ditch,” Yahoo Finance reports. “Most economists expect the global economy to escape the tendrils of a full-blown recession. Still, a small but vocal minority think the current downturn could become something more severe, especially with the U.S.-China trade war still up in the air.”

As of early this morning, these headlines continue to drag on the averages. Futures are pointing to some follow-through on the downside, so I’ll continue to closely monitor the market’s reaction as the weekend approaches.

Turning to the tech world, a transformational new communications satellite constellation just made the dream of spending time in beautiful but remote locations — while still having high-speed internet access — more of a possibility for millions.

“Within a few years, billions who don’t have high-speed internet will be able to connect and enjoy the educational, social and business opportunities offered by the internet — things that we take for granted,” our tech maven Ray Blanco explains.

This story begins with a Soyuz rocket, operated by Arianespace, lifting off the pad in French Guiana a couple of weeks ago.

Its satellites now circle the Earth in a low orbit, Ray explains, greatly reducing the speed of light-related lag caused by communications satellites thousands of miles higher.

“They’re small. And they are cheap — thanks to one tiny company my readers already have a stake in,” Ray says.

Ray expects this new service to create a ripple effect bolstering the shares of many companies, including American Tower Corp. (NYSE: AMT), a stock that survived the fourth-quarter meltdown virtually unscathed. Just look at this beautiful chart:

AMT

Here’s the kicker: Everything about this story shifts on April 25. Click here for the details.

While most stocks struggled, the FANNGs found a way to rally despite yesterday’s choppy action.

Amazon.com (NASDAQ:AMZN) extended its winning streak to four days, jumping more than 2% to top its November-December highs we had our eye on yesterday.

Meanwhile, Facebook Inc. (NASDAQ:FB) traders tuned out the ongoing privacy scandal, sending shares of the social media giant higher by more than 2% on the day. Facebook stock has now successfully bounced off its rising 50-day moving average. We’ll see if it can maintain this newfound momentum heading into the weekend.

Sincerely,

Greg Guenthner

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Greg Guenthner

Greg Guenthner, CMT, is the editor of Opening Bell Fortunes and Seven Figure Signals. He has been with Agora Financial/Seven Figure Publishing since 2005. In 2019, the average position in Greg’s Sunrise Fortunes portfolio outperformed the S&P 500 by 1.65x.

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