The Federal Reserve’s September Meeting: A Closer Look
The Federal Reserve’s September Federal Open Market Committee (FOMC) meeting is underway, and the big question on everyone’s mind is how much will the Federal Reserve cut key interest rates?
Recent data suggests that there is a growing consensus for a 0.5% rate cut rather than the previously expected 0.25% cut. The probability of a 0.5% rate cut has increased to 57%, according to CME’s FedWatch Tool, after the morning’s retail sales report.
Understanding the Data
- Retail sales increased 0.1% in August, surpassing expectations of a 0.2% decline.
- July’s retail sales were revised up to a 1.1% increase.
- August retail sales excluding autos and gas missed estimates with a 0.2% increase.
Implications of a 0.5% Rate Cut
If the Federal Reserve decides to cut key interest rates by 0.5%, it would signify a proactive move rather than a reactive one. With Treasury yields declining and market rates differing significantly from federal funds rates, a larger rate cut is being considered to align with market trends.
What to Expect
Following the Fed’s announcement, a more dovish tone is anticipated in both the official statement and Fed Chair Jerome Powell’s press conference. The “dot plot” is also expected to forecast additional rate cuts in the future.
Portfolio Grader Recommendations
In preparation for the Fed’s decision, it’s essential to review your portfolio. I revised my Portfolio Grader recommendations for 107 big blue chip stocks, upgrading and downgrading several stocks based on institutional buying pressure and financial health.
Recent Ratings Changes
- 11 stocks upgraded from Buy to Strong Buy.
- 17 stocks upgraded from Hold to Buy.
- 18 stocks upgraded from Sell to Hold.
- 19 stocks downgraded from Buy to Hold.
- 13 stocks downgraded from Hold to Sell.
- 4 stocks downgraded from Sell to Strong Sell.
Top 10 Buy-rated Stocks:
| ADP – Automatic Data Processing, Inc. | B |
| ANET – Arista Networks, Inc. | B |
| CARR – Carrier Global Corp. | B |
| CLX – Clorox Company | B |
| COO – Cooper Companies, Inc. | B |
| DD – DuPont de Nemours, Inc. | B |
| DOCU – DocuSign, Inc. | B |
| JLL – Jones Lang LaSalle Incorporated | B |
| MOH – Molina Healthcare, Inc. | B |
| MPWR – Monolithic Power Systems, Inc. | B |
Looking Ahead
As we await the Fed’s announcement, now is the time to position your portfolio strategically for potential market shifts. With upcoming rate cuts, it’s crucial to focus on fundamentally superior stocks that are likely to benefit the most.
Opportunities are on the horizon, and being prepared can lead to profitable outcomes in the market.
Editor’s Note
For a comprehensive analysis and insights on navigating the current market landscape, access the full briefing on the impending cash bubble and how you can capitalize on it.
Remember, money goes where it’s treated best, and right now is the time to act.
Sincerely,
Louis Navellier
Editor, Market 360