The Fed again refuses to start normalizing interest rates – the market sinks

The Federal Reserve said on Wednesday that they are not ready to start normalizing interest rates. The market greeted that news with a loss, then a gain on Thursday and, finally, a loss on Friday. Eventually, most people will understand that the Fed has painted themselves into a corner. Had they increased interest rates in 2009 at the end of the recession, they would now be high enough where they could be lowered to help economic weakness. But the rates are still at almost zero. So, there is no lowering that can reasonably happen.

My relative-strength market sector table shows, for the second-straight week,  big weakness in the Financial Group. It is very hard for banks, financial firms and insurance companies to operate profitably in a central-bank-induced period of exceptionally low interest rates. The Technology Group was also very weak with the exception of Telecom. The market goes higher when there is widespread gains among the Technology and Cyclical Group companies. But, most of Technology is weak and the Cyclical Group only had two significantly good sectors: machines and basic materials.

Here’s the relative-strength chart of the Banking Sector:


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