Is The Fed’s Policy Restrictive?

The Fed’s 25-basis-point cut in the federal funds rate last week doesn’t change our S&P 500 price targets or our subjective probabilities of a meltup (25% odds) or correction (20%) by year-end. Today, Dr Ed explores the reactions to the rate cut in the markets for stocks, bonds, the dollar, and gold as well as the significant takeaways from the FOMC’s September 17 meeting. Notably, the post-meeting Dot Plot and press conference revealed less dovishness than many investors had expected. … Also: Dr Ed opines on the weird notion of an indeterminable “neutral” federal funds rate used to determine the restrictiveness of Fed monetary policy.