What you are looking at above is a chart of the Fed Fund futures for December and they made a big shift yesterday to price in a 89% chance of at least one rate cut by that month. On Sunday, the odds were near 50/50 that there would be no rate cut at all by that meeting, so Monday saw a big shift in the odds.

What caused this move, was poor economic data that came out yesterday. They showed that the US manufacturing PMI index dropped to 48.7 in May. A number below 50 means contraction.

The dollar traded down on the news and gold perked up. The stock market saw some selling, but NVDA was up 4.9% for the day, again, as traders keep buying ahead of next Tuesday’s. 10-1 stock split that shareholders of record this Thursday will get.

Now the Fed Fund futures are also pricing a 60% chance of a rate cut in September. They still see no cuts in July or this month, when the Federal Reserve meets next Wednesday, the day after the NVA split mania. It’ll probably take more poor economic data, though, to actually make a cut happen, but when bad data comes it comes suddenly. The job numbers now will be key this summer.

Any interest rates cuts would be extremely inflationary for the economy, with the CPI failing to even get below 3%. Interest rates ARE NOT TOO HIGH or NOT HIGH ENOUGH to stop inflation.

I do not think interest rates are going to go up anymore this year, but one day they will, and much more than people imagine they would today. That will probably be when the next interest rate hiking cycle comes, after a future rate cutting cycle comes first in response to a stock market bear market/recessionary cycle. I do not think we are there yet, but it could start after the election.

That’s why I remain happy to have roughly 50% of my money in CD’s and bonds and with most of the rest of focused on precious metals and mining stocks for now. It’s a mix of defense and offense going forward. I do not think this is time to be on margin and making lots of risky bets. The overall “AI” sector is lagging the stock market and is junk.

India election results are pressuring Asian markets and commodity markets too this morning, with silver trading below $30 for the moment.

And…..

There is a talk of an Ethereum ETF, and the SEC is making moves to make it happen.

Such an ETF is now necessary to keep the crypto market excitement going.

The Bitcoin ETF’s, when launched a few months ago, caused people to buy into Bitcoin ahead of the ETF’s, and once they launched they brought billions of dollars in small investors money into Bitcoin. This all helped spur a big run in Bitcoin earlier this year.

It ended, though, and now Bitcoin is lagging the stock market, so something needs to be done if crypto excitement is to continue - hence the new need for an Ethereum ETF, to try to provoke more buying into the crypto market, like the Bitcoin ETF’s did.

And it’s now the SEC’s reputation at stake too, because they hesitated on allowing a Bitcoin ETF to be launched for years and then finally gave in. It would look really bad for the regulators if Bitcoin crashed this year just after they approved them.

Giant crypto creators are donating a lot of money to politicians in DC.

-Mike

^{Disclaimer: The opinions expressed in this newsletter are those of WallstreetWindow its editors and contributors, and may change without notice. The information in this newsletter may become outdated and we have no obligation to update it. The information in this newsletter is not intended to constitute individual investment advice and is not designed to meet your personal financial situation. It is provided for information purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor or a group of investors. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. We strongly advise you to discuss your investment options with a financial adviser prior to making any investments, including whether any investment is suitable for your specific needs. WallStreetWindow is owned by Timingwallstreet, Inc. and it is not a registered investment advisor and does not provide individual investment advice. This is a publication for the general public.}