Patient – Monday Morning Market Memo – June 24, 2019

Patient – Monday Morning Market Memo – June 24, 2019

Good morning,

Merriam-Webster’s online dictionary defines patient as bearing pains or trials calmly or without complaint and manifesting forbearance under provocation or strain, when used as an adjective, or as an individual awaiting or under medical care and treatment, when used as noun. Often in life, when one is or is not being patient, or is a patient, things are of an important nature. For investors, its important how and when the Federal Reserve (the central bank of the United States) uses, or does not use, the word patient!

In its previous policy statement last month, the Federal Reserve reported “the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate”. In the June statement released last week, the Fed removed the word patient. Simply put, the market translates this to mean interest rate cuts are coming. The CME FedWatch Tool, is now assigning 100% probability the Fed will cut rates at the July 31st meeting.

Figuratively speaking, many believe the Federal Reserve is the Doctor, the economy (and by extension the stock market) is the patient, and interest rate cuts are the medicine. As of last week, the patient liked the thoughts of the medicine it is expecting to receive. All three major stock market indices posted strong weekly gains. The Dow Jones Industrial Average rose 2.4%, the Standard & Poor’s 500 Index gained 2.2% (hitting an all-time high last week), and the NASDAQ Composite led the advance with a 3% weekly jump.

Looking to the week ahead, the market will be focused on President Trump and Chinese President Xi who are expected to discuss the ongoing trade war at the Group of 20 meeting in Osaka, Japan. We’ll also get a batch of diverse earnings reports in the week ahead, from companies including Micron Technology, FedEx, General Mills, Nike, and Walgreens Boots Alliance.

Be well – Southport Station Financial Management, LLC