First off, I don’t love that a majority of CME traders now expect a 50bp cut today, because it leaves wiggle room for the Fed to serve agenda, should it want to come off as playing a bit of hard ball as opposed to a rolling over dove. One could envision a play where if that does not come about, the machines could get pissed and start selling.
But that is thinking, not yet reality. I’d prefer not to over-react to something that could happen.
I have done some profit taking (on balance) this week and have a high enough cash percentage that I am inclined to take whatever lumps may come about if the machines go negative this week, post-FOMC. Because they may well go the other way, instead.
As you know, I have an increasingly positive fundamental sector view for gold mining. Backing out the FOMC noise (difficult though that can be) HUI (current: 321) has 375+ as its next significant target, after already dinking the 330 (where pure traders might have sold). I think I will be a big boy and not hedge positions. Depending on how this week shakes out, however, I would like to increase positions for the above-noted 375 target. But for me, patience until after FOMC and evaluating how the dust settles (no pun there).
As for broad stock market positioning, I continue to lean “to or through the election”, although that view can terminate at any time, given the high risk, late stage view.
This brief update is just a way of saying that I have taken some profits and am now just sitting on my hands.
