Market On Open, Wednesday 18 June

Last updated on Jun 18, 2025

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FOMC

by Alex King, CEO, Cestrian Capital Research, Inc

In theory, FOMC today should be a nothingburger. Surely no-one is expecting a rate cut or a rate hike from Chairman Powell? Inflation isn’t so far plummeting on the Fed’s measures; the oil-shock risk persists in the Middle East; and since we remain in the 90-day pause period, no-one can say with certainty what impact tariffs will have on inflation. Since expecting plain sailing rarely delivers a good outcome in markets, what could rock the boat?

A surprise rate cut? - hard to call the impact. The only reason I think the Fed could in their framework justify a cut is because of a belief that the economy is weaker than it appears. You can find many people calling this to be the case, and certainly the retail sales data printed yesterday is supportive of this argument, but I don’t think the Fed views things this way and if it does, it will be a new narrative from them. In which case will a rate cut be taken as positive for stocks, or not?

A surprise rate rise? - I would fall off my chair if this happens.
Some kind of press conference narrative about elevated risks or whatnot.

I am no Fed Whisperer - for that you need Yimin Xu, here:

but what I do know is that usually “probably a nothingburger" FOMC days are a very good excuse for price-setting investors to carry out the actions they planned to do anyway - be that buy up stocks or dump them - and then have the narrative machine spin up to explain why it was all because of <whatever happened at FOMC> (keyword: FILLINTHEBLANK <GO>).

It is not blindingly obvious to me from the key charts at the moment what the next big move is in markets. I think if we continue to see Goldilocks economics - low inflation and growth holding up and jobs holding up - then stocks can move upwards rather powerfully. If we see Iran suddenly fold then the same is true of equity indices I think. I am not sure what it would take from Iran to actually materially damage equities at present, since there has been plenty of what now seems to be called “kinetic war” (sounds nice, doesn't sound like it involves death or anything unpleasant like that) and markets have shrugged it off. So I don’t think there is a major bearish external stimulus about to it. I do think that a lot of charts look short-term topped out even though my firm opinion is that we see new all-time-highs in equity indices during 2025.

Take $SPY for instance. If I had to guess I would say $SPY is likely going to bounce around between $580-600 for a little while. You can open a full page version of this chart, here.

I would expect the 200-day to act as support, and for now it cannot bust up and through that recent high. I believe dips that hold over that 200-day are buyable.

Let’s dig in and see what other nuggets we may find in the market at present.