The Lone Ranger was a staple cowboy show on early TV. The William Tell Overture introduced it. The Ranger placing a silver bullet on a table and riding off into the sunset marked the end.

Yesterday, the Fed essentially placed the silver bullet on the table, saying that it anticipated no more rate rises and a decrease of 75bp or so in the Fed Funds rate next year. Financial market reaction was understandably positive and, equally understandably, muted. The yield on the 10-year T-note falling by 20bp to just above 4%. Stocks have gone up slightly in sympathy, with the most significant gains (as one would have expected) in the Russell 2000 index, a mid-cap index with little non-US exposure.

Brokerage house market strategists, whom I perceive to have been generally bearish in the runup to the Fed meeting, are now beginning a competition to see how can be the most bullish. There are apparently already calls for Fed Funds to fall by 150bp in 2024.

The idea that rates have peaked will certainly make for firmer footing for the overall stock market. The biggest beneficiaries, to my mind, will be: the most speculative names (the opportunity cost of holding them will fall), financials directly impacted by lower rates and the most highly financially leveraged.

Thornier stock market issues still remain, though–among them, whether retail sales are only rising because of strenuous corporate efforts to unload excess pandemic-era inventories (this is what I think); the value of urban office space (still shrinking, I think) and the loans that support them; the decline in the US GDP growth rate from, say, 3% yearly a generation ago to barely a detectable pulse today. Better schools and more immigrants are the obvious answers, but it’s unclear how achievable they may be.