Powell: It's Okay If the Fed Breaks Something

(11/3/22) The most volatile 90-minutes in market history followed Fed Chair Jerome Powell's anticipated 75-basic point rate hike coupled with hawkish language promising still higher rates to come.

And, Powell said it's okay if the Fed breaks something because they have the tools to fix it, going back to quantitative easing and zero interest rates, flooding the markets with liquidity anew.

Investors ignored that part, instead focusing on the here and now and future rate hikes to come on the way to a 5% terminal interest rate.

Markets broke through support at the 50-DMA, now taking aim at the 20-DMA.

If that occurs, there's nothing stopping the markets from retesting the lows we saw in September.

Markets, in fact, haven't gone anywhere for the past several months, trapped in a sideways trading range.

Moving into the end of the year, there's lots of cash on the books of managers that will have to be put back to work for year-end reporting.

Stock buybacks are back in play, as well, and next week's midterm elections are expected to throw congress into legislative gridlock.

We're suggesting not to over-react to yesterday's Fed announcement, but also not ignore the fact that markets could still go lower from here.