The 2:00PM press conference held by US Fed Chairman Jerome Powell at the conclusion of the January 29th FOMC (Federal Open Market Committee) meeting started out with a bang. Within minutes the S&P 500 rallied to its high of the day. Shortly thereafter, the world’s leading stock index began to make lower highs and lower lows and closed near its lows for the day. From its high to its close the venerable index declined by 0.60%.
The S&P 500 declined steadily after the initial spike because Federal Reserve Chairman Powell stated that US household spending had waned from “strong” to “moderate”. He also emphasized that inflation in the US was below the Federal Reserve’s target.
To gain an understanding of why the Federal Reserve is so concerned about inflation being under 2% view my math of the markets ’s ipassionate about
The volatility caused by the FOMC’s change in conditions for the US economy has increased the probability of a global market crash happening by the end of the first quarter of 2020. See also “Wuhan Virus has potential to cause global market crash”, January 25, 2020.
The Bull & Bear Tracker (BBT) which produced gains at an average of 5% per month for the past six consecutive months is an excellent vehicle for hedging against market crashes. The BBT produces its greatest returns when the S&P 500 and Dow Jones indices are the most volatile. In 2018 the Bull & Bear Tracker’s signals produced gains of 7.96% and 9.84% for the only two of the S&P 500’s percentage decline days that ranked in its top 25 percentage decline days from 2009 to 2020.