Mission Accomplished!? Not the view of the BoE/The pivot party has the Bull boat standing room only

I saw one news outlet refer to what we're seeing in the markets as the Pivot Party and it certainly is. But, when you think about it, this party really started last October when the stock market bottomed just as the Fed was decelerating its pace of rate increases from 75 bps. That party was mostly populated by the big cap tech stocks as we know but now it seems that everyone has showed up, good for those of us who own small and mid-cap stocks, in addition to some of the 493 S&P 500 names. 

We do though have to ask ourselves, is this the equivalent of the 2nd half of 2000 as the Fed was shifting to rate cuts, which they commenced in January 2021 and you know what happened to the economy and markets? Is this a replay of the latter part of 2006 and into 2007 where the cuts began in September 2007, the stock market made a new high in October 2007 and then the bottom fell out? Or is this 1994 right before the take off in 1995? I'm not saying it will be the first two but I definitely don't think it's the latter either. Nothing is easy as it seems. 

I can't help watching Jay Powell yesterday and remembering the George W. Bush speech on May 1st, 2003 on the aircraft carrier USS Abraham Lincoln with a big sign behind saying "Mission Accomplished." It was of course far from it. 

There was no inner Paul Volcker heard yesterday with Powell. There was no reminder of the lessons learned from the 1970's. There was no mention that they want to see a 'sustained' pace of lower inflation before they get comfortable. There was even a different guy than the one who spoke just two weeks ago who tried to push back on market easing expectations. It was seemingly 'Mission Accomplished' and now we just have to figure out when and why we start cutting rates was his message. Will it be the Fed chasing lower the REAL rate and moving solely due to continued moderation in inflation? Will it instead take a notable rise in the unemployment rate? What happens if the huge easing of financial conditions we're currently seeing regenerates quicker economic growth and inflation? 

As my former boss Larry Lindsey wrote yesterday sarcastically, "Fifteen years of extremely easy monetary policy, extraordinary measures such as QE, and sustained huge budget deficits have apparently been tamed with nothing more than a little indigestion and certainly no inflation. Perhaps Modern Monetary Theory was right after all."

After believing that we were due for a 10 yr Treasury rally on the October 23rd 5% reversal day, I think the 10 yr note is now a sale.