The Rotation Is Coming… Here’s Where The Money Goes Next w/ Mel Mattison

**Mel Mattison** (0:00)
And I think the market is right now, as we speak, kind of going through this rotation of saying, like, look, we still like the memory names, we still like the AI trade, but some of these things that just have not been participating in the last couple of months because of Iran, let's take some of our profits from Sandisk or Micron and let's buy.

**John Gill** (0:21)
The SpaceX IPO is in the books. Kevin Warsh is the new chairman of the Federal Reserve just finished presiding over his first FOMC meeting and the Strait of Hormuz should be open in a matter of days. What do investors need to know to navigate these markets? Hello and welcome to Milk Road Macro, the podcast that knows that SpaceX's stock price has taken off like a rocket, but let's hope it doesn't come back to the launch pad like one of their rockets. I'm your host, John Gill, and today is Wednesday, June 17th, and today we are joined by Mel Mattison. Mel is a writer, investor, founder, and fintech executive with over 20 years of experience in financial services. He is one of the best analysts and traders in the business with a deep knowledge of both history and a passion for savvy investing. Mel is going to share a ton of alpha with us today and break down what's going on in the markets. If that sounds good to you, make sure you like and subscribe, share this episode with somebody who needs to hear it. Today's episode is brought to you by Nexo, earn interest, borrow and trade crypto, Bitget Stocks 2 with real liquidity, real dividends. Without further ado, welcome back to Milk Road Macro, Mel Mattison. How are you, sir?

**Mel Mattison** (1:22)
Doing great, John, and thanks for having me.

**John Gill** (1:24)
I'm excited to talk to you today. We were just chatting before the show about the FOMC meeting and the takeaways from that. It looks like the Federal Reserve has held interest rates unchanged. But what else are you seeing coming out of this meeting? We haven't heard yet the press conference yet, so I'm sure others will know more than us by the time this comes out. But what are you seeing right now? What's your initial reaction here?

**Mel Mattison** (1:45)
Yeah, I think it's pretty much as expected. We are recording this right after 2 PM Eastern, so the dots are out, the vote is out, but the press conference has yet to begin.
What it's showing is basically on the dots, we've got half, about nine dots saying there's gonna be a hike this year, and then about nine saying either a cut or no hike. So we have a divided Fed, despite the fact that the statement was altered and therefore the vote was unanimous. What we have here is basically, I think, a Fed in wait and see mode, which I think makes a lot of sense, given that this peace deal is not even a week old and the MOU has not been signed. We've definitely seen oil drop significantly. We've seen the market start pricing this in as a done deal, but it isn't. And so I think the prudent thing is for nobody to jump to too many conclusions. And it looks a lot like that's what the Federal Reserve Board of the FOMC is doing. What we do have as well is going to be the press conference. I think a lot of people are going to be really curious about any commentary on the balance sheet.
There's been a lot of discussion obviously about how Warsh might be able to try to make the arguments around reduction in the balance sheet or changing the maturity allocation of the balance sheet and therefore allowing for rate cuts without inflationary pressures. So this is all going to be new. The market is going to take it in. The market is going to absorb it. And Warsh is a pretty savvy political operator. I don't think he's going to necessarily come out this afternoon and make any extremely strong proclamations. I think we're in a little bit of a honeymoon period where he gets a little bit of time here to see what's going on, to get himself re-acclimated to the Fed where of course he served as a governor during the financial crisis. To get to know his colleagues, none of the current governors were governors when he was on the board.
I think right now actually what we've seen is the Federal Reserve, while not insignificant, definitely not be as big a player in markets. I think what markets are really more focused on these days is what's going on in AI world, what's going on with the war in Iran, and I think what's happening on a more macro level in the economy with jobs, and so on, and that the Fed really can kind of almost, I wouldn't say they're going to take a summer off, but I think we'll know a lot more about where the Fed is heading at the end of the summer than we do now, and I think in the meantime, we might see some market gyrations off of the Fed. We're seeing a very slight dip is the initial reaction in the S&P. It was down just a few points when the statement was released. It's now down about 40 So obviously, a 30-point move on the S&P that's at 7,500 is relatively insignificant, and it always moves around a lot, right? Well, who knows where it will end up today? But I think no matter where it ends up today, that's not what's going to drive the next few weeks, the next few months of the market. We'll price in whatever news comes out today fairly quickly, and by Tuesday of next week, we're all going to be about a bunch of other information moving markets.