What the Fed really said (and how to play it)

[Rogue Economics] Editor’s Note: Below is an interesting message from our colleagues at InvestorPlace that we think you may find very insightful. --------------------------------------------------------------- Dear Rogue Economics Reader, Just days ago, members of the central bank met to discuss monetary policy. On Wednesday, May 1st the Fed announced the results of that meeting and decided to leave interest rates unchanged. No surprise there. But things started to get interesting in the post-meeting press conference… See, back in December, Board Chair Jerome Powell stated that the Fed was done hiking interest rates and, instead, would likely cut rates in 2024. The market got excited about the prospects for rate cuts, and stocks rallied. Yet over the past two months, inflation has proven more stubborn than anticipated, causing investors to assume the Fed would pivot hawkish and hint that another rate hike could be looming. But that didn’t happen. Instead, during Wednesday's press conference, Powell largely doubled-down on his December outlook. He kept saying that monetary policy is currently sufficiently restrictive to get inflation back to 2%. He said rate cuts are still likely on the way. Just consider: for the past 40 years, whenever the Fed has cut rates while the economy has continued to expand, stocks have rallied every single time. It’s quite a rare combination of factors. [And it could be rocket fuel for the right companies (especially Elon Musk’s latest innovation).]( This happened in the mid-1980s. The Fed cut rates while the economy kept growing. During that time, the market jumped about 65%. It happened again in the mid-1990s… Again in the late ‘90s… And most recently, this phenomenon happened in the late 2010s – and powered a 30% rally in stocks. [Image]( The historical precedent is clear. Whenever the Fed cuts rates while the economy continues to grow, stocks rally. That’s about to happen all over again. And the Fed confirmed as much earlier this week. That means now is the time to buy stocks – before the epic summer rally. That said, some stocks have the potential to dramatically outperform the overall market. In particular, I believe Elon Musk’s latest innovation could create massive opportunities for those who know how to position themselves… Especially if the Fed ignites a rally. [Find out why “Project Apollo” could mint new millionaires here.]( Get Ready to Rally, [Luke Lango's signature] Luke Lango Senior Investment Analyst, InvestorPlace © 2024 Rogue Economics. All rights reserved. 455 NE 5th Ave Suite D384, Delray Beach, FL 33483. To ensure our emails continue reaching your inbox, please [add our email address]( to your address book. No longer wish to receive special offers from us? Click [here]( for options.