Yesterday the minutes of the Fed meeting (FOMC Minutes) became available where most officials were in favor of a 0.5% rate hike. The likelihood of a recession next year is still high. The cycle of rate hikes will continue for the time being. The signal for a rate cut would be higher unemployment, lower inflation, and a deeper fall in the stock markets. So far, none of this has been seen.
All investors are wondering if there will be a Santa Rally this year. I would like to disappoint you that we are already in a cycle of that rally. We are up 13% from the lows, and the DOW is basically almost back up from its decline. Remember I always write that markets are always ahead of the curve.
The rally in the markets could last for a while. The S&P500 index has the next target of 4200-4300. And that’s another +5%. So, for those who were waiting for the rally, it is too late to enter.
By the way, the gold is holding pretty well at the levels of $1730-1750, which gives a good possibility to go down to $1850, or maybe even $1900 per ounce by the end of the year. The global target for the next year is $2500.