Yesterday's Rally "Not What Powell Wanted", Terminal Rates Could Still Approach 7%

38 year market veteran Kenny Polcari offers his take on Powell's chat yesterday, the market's face-ripping rally, and how he sees stocks trading through December.

Friend of Fringe Finance and well known financial news contributor - as well as 38 year veteran of markets - Kenny Polcari has been kind enough to share his most recent thoughts on the market with our readers.

For those who aren’t familiar with Kenny or don’t recognize him from TV, he is Managing Partner of Kace Capital Advisors and Chief Market Strategist at SlateStone Wealth. He started his career on the floor of the New York Stock Exchange (NYSE) as an institutional broker back in the early eighties when the march of electronic trading was already taking its first steps, and the great bull was first learning to run.

Here’s his take on markets heading into the Thursday, December 1, 2022, trading day:

The post has been lightly edited for punctuation and grammar.

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Powell Ignites a Rally - Did He Plan It?

There is only one thing you need to know about what happened yesterday: Jay Powell confirmed what we have been hearing all along - he could not have been any clearer – the increment of rate increases is going to start to slow in December to 50 bps but will continue to rise.

He went onto say that we are “moving into a new phase of policy tightening in which they would try to judge how high rates need to rise” and that he and his colleagues do not want to ‘overtighten’ (think soft landing). And that is the key part of the speech that sent the algos into overdrive. I mean nearly everything assumes that the Fed will overtighten, the same way they overstimulated – the same way a pendulum swings