Video summary
On September 16th, the Federal Reserve executed a unanimous decision to raise interest rates by 25 basis points, bringing the overnight rate range to between 3.75% and 4%. This move was driven by Chairman Jerome Powell's conviction that higher rates are necessary to support a timely return to the 2% inflation target. However, the market reaction was immediate and sharp, with the S&P 500 dropping approximately 100 points from its opening levels and tech stocks struggling to maintain gains despite their usual strength. The consensus among investors appears to be that while the rate hike is a responsible step, it has triggered a sell-off as traders reassess the path forward for the remainder of the year, with only two more meetings left before year-end where further hikes are still priced in.
The rise in interest rates significantly impacted asset prices, particularly long-term bonds and precious metals. The yield on the 10-year Treasury note surged to just above 5%, while gold retreated sharply from its recent highs, losing roughly $100 per ounce to trade around $4,294. This decline was exacerbated by a strengthening U.S. dollar, which now sits above the 100 handle, putting further pressure on commodities like silver and platinum. Financial sector stocks also suffered heavily, with major banks such as Bank of America and Wells Fargo seeing significant drops, while technology giants faced mixed results; Nvidia remained relatively resilient but gave up earlier gains, whereas Amazon and Google struggled to hold their ground against the broader market's downward momentum.
Beyond the immediate reaction to the Fed's announcement, the transcript highlights a notable shift in communication style under Chair Powell, who concluded his press conference in under 30 minutes without allowing follow-up questions, marking a departure from previous longer sessions. Despite the short duration of the event, the markets accelerated rapidly afterward, with crude oil pulling back from overnight highs and various equities finding support at key technical levels. While the equity market is currently trading lower, it remains elevated by nearly 30% compared to lows seen earlier in the year, suggesting that while volatility has increased, the underlying trend has not completely reversed. The session ended with anticipation for a guest appearance later in the day to discuss ETF strategies, particularly regarding metals and treasuries in this new high-rate environment.
Read the full video transcript
I am.
>> [music]
>> Oh, thank you, Mr. Producer. How'd that
happen? Welcome, folks. Tommy O'Brien
coming to live from TFN and it's Fed
day. And we got a 25 basis point hike.
Yes, Chairman Powell so he just finished
up his press conference. We got a
10-year yield pushing 5% right now. It's
a unanimous decision. So, they hike 25
basis points. And we'll see where we go
from there. But right now you have
markets with an S&P that just dropped
about 70 points from where we came into
that decision. We're negative by about
half a percent right now. Tech stocks
carrying this market to a degree.
We were dramatically higher. You give up
all those gains for flat right now on
the Nasdaq 100. 29,241.
The Dow gives it up. Down by 1.2%.
51,924
and the small caps as well down by 9/10%
off 25 points. Trading at 2868.
I mentioned the 10-year and there it is.
So, we get a hike and we get yields
higher on the 10-year right now right at
5%. The yield on the 10-year we're
negative by five ticks 105.25. The
dollar catches a bid.
How's that? Above 100 and we'll see if
this can be
a decisive move. Now, we've bumped up
against this 100 price point before.
We're just above 100 right now up 61
pennies at 100.22 on the dollar. But
yeah, you're catching a bid today.
Now, metals that's weighing on metals.
Gold just gave up 100 bucks from where
we were coming into that number. You got
a brief spike actually to 4400 right out
of the gate at 2:00 and then you give it
up. So, we got stronger dollar, you got
higher yields, and you got the gold down
by $38 on the session. Gold was higher
by 50 or 60 bucks. So, you give up
basically $100 on that move. We're
trading at 42.94 right now on gold down
by 9/10%. Silver down by about 6/10%.
All the metals were in the green coming
into this. You got platinum right now
down 1.5% 17.51. We check in on copper
trading at 6.44 right now. We take a
look at the gold equities GDX 61.96.
And we'll see
in terms of if Warsh has the conviction,
if the Fed has the conviction, right? To
do what's necessary, but they do the
first hike.
And that would be the first step. They
raise by a quarter point.
And as I mentioned, unanimous decision.
There've been dissenters recently. So,
now the overnight rate 3.75 to 4%. Okay?
And the median forecast, you're looking
for an additional hike coming this year.
Timelier return. That was the That was
getting a lot of attention. Okay? As
that statement comes out
that this rate hike will support a
timelier return to 2% inflation.
A sober decision, a serious decision,
responsible decision, one where they
we've been preparing for and thinking
about
in my 110 or 120 days here.
And yeah, he finishes up that press
conference. And one of the things at
that press conference actually was no
follow-up questions allowed.
Less is more in the age of Warsh. So, no
follow-up questions, a tighter press
conference, wraps up in under a half
hour. Under a half hour. No more 45
minutes like was the case with Powell.
They wrap it up.
And boy, since he wrapped it up, things
accelerated. S&P's continuing to drop,
gold continuing to drop right now. We
check back in on yields. And yeah, we
got the 10-year right now just above 5%.
You go up and down the curve. Okay, you
got your 2-year up about seven basis
points 473.
Now remember the 2-year is at 473.
And even after they hike
they're now at 375 to 4%. Okay, there's
a huge difference from where the Fed is
to where the 2-year is. They have one
more hike priced in by the year-end.
There's only two more meetings.
By the year-end, so maybe they go hike
skip a meeting hike, but nonetheless
you're talking about two out of three
hikes to end the year for their final
three meetings and there's your 10-year
sitting at now 5.01.
But on the 30-year you get a little
easing. Market saying maybe they will
get inflation under control. But you got
higher yields and even that 10-year
sitting right at 5% right now on the
10-year.
Yeah, you're talking about the dollar
rising
and markets giving it up, man. The day
we got fifth we got 49 minutes left to
go in the trading day as markets
accelerate. Now crude you back off from
the overnight highs of 106.75 we're
trading at 102.54 right now. You take a
look at the heat map.
Okay, you're talking about financials.
Look at these financials. Bank of
America off 3.2% Wells Fargo similar
action some of the consumer staples Coke
Costco
We got Boeing down 5% right now.
And then a little bit of a mixed bag in
technology. Nvidia up by nearly 1% right
now. Intel with some good news with SK
Hynix this morning it was up by 5% at
one point.
But some of the big dogs out there as in
Google, Amazon, Microsoft
Broadcom down by 6/10%
Let's jump around to some of those
equities. Kick it off with the Nvidia
shares. They give it up.
Take a look at the Nvidia right now
213.04.
You were all the way up today trading at
217 almost. You give up that action.
Yeah, you got a lot of strength up here,
volume.
Nvidia's one of the strongest equities
even as you get some volatility in the
chip sector.
Jump around to Amazon.
Look how quickly you make a run to the
bottom of that channel, man. Woo. All
right. Look at this channel. Well
defined since 2022.
Okay, they come out with gangbuster
earnings in July. You hit 287. And
remember where the air got sucked out of
the room? That was actually Bezos. He
had a plan sell. That was the first day.
And just like that, here's Amazon, $42
off of the highs made last month.
Challenging the bottom of that channel.
Amazon off 1.3% right now.
Google off about 9/10% right now.
Look at the volume drying up even on a
weekly basis recently. That was a
holiday week last week.
This week so far, 42.6 million.
Jump off to Microsoft. Yeah, Microsoft
off 1.5%. Oh boy, folks. Got quite a
little acceleration going on these
markets. Look at this.
They're getting their bets in order
right after even war finished. Things
accelerating with an S&P.
Now down 100 points from where we came
into that number. 100 points from where
we came into that number. We hit 7694
just after 2:00 and we're at 7591.
We check in on gold. Trading about 4283.
Let's take a look at gold.
So, gold's had some volume in the last
few weeks. The metals, the equities have
not.
But yeah, we got some and we're going to
get some action this week as well.
4,000's hanging out there the way the
metals are working right now.
As in, you got gold off 47 bucks.
You got a GDX off about 2.6%.
You know, the equities though, folks,
look at the run we've still had.
Equities are still up nearly 30% from
that $70 price point. 30% from that
price point, but you're trading lower
today.
All right, folks, stay tuned. We're
coming back with have great guest,
Elliot Wave senior vice president
institutional ETF strategist with
Direction. We'll be talking some ETFs.
We'll be talking some
metals, some mining ETFs in terms of
gold miners, and we'll be talking, of
course, some treasury ETFs on Fed day.
We're coming back with Elliot, folks.
Stay tuned.
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