

WOYM: FOMC Reaction; Growth vs Value check-in; Animal Spirits
Dec 20, 2024
Dive into the latest market dynamics as experts dissect the FOMC's impact on interest rates and its ripple effects across sectors. Explore the ongoing tug-of-war between growth and value strategies, with insights into emerging markets and currency trends. Delve into the psychology of the market, highlighting 'Animal Spirits' and speculative investments. Plus, gain a deeper understanding of sectors like semiconductors and the implications of AI on stocks like Micron. A thorough analysis that points toward investment opportunities amid fluctuating economic conditions.
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FOMC Reaction and Market Outlook
- Markets reacted negatively to the FOMC outcome, initially down 80 bps, accelerating after Powell's remarks.
- Long-term outlook is bullish due to higher growth expectations, despite short-term bearish sentiment.
Focus on the 10-Year Yield
- Watch the 10-year yield, as it influences mortgage rates and impacts market breadth expansion.
- Higher rates negatively affect present value of securities, impacting small caps more significantly.
Dollar Strength and Emerging Markets
- The dollar is strengthening due to lower rate cut expectations, making US investments more appealing to international investors.
- This dynamic negatively affects emerging markets.