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Gotta love that financial market enthusiasm for central banks.

Last week the markets rallied on signals from the European Central Bank that it would cut its key interest rate–now at a negative 0.40%–to a negative -0.50%, lower the rates that banks pay to borrow money from the central bank, and restart its program of quantitive easing to the tune of buying 50 billion euros of bonds a month.

This week the markets are betting that the Fed minutes scheduled for release on Wednesday will show the U.S. central bank hot to cut interest rates in September by at least 25 basis points and moving toward a long rate cutting cycle from a policy of just a few prophylactic cuts. And that on Friday in a speech at the Fed’s annual Jackson Hole, Wyoming, banker-fest, Fed chair Jerome Powell will signal a September rate cut and express enough concern about a slowdown in the global economy to put 50 basis points of September cuts strongly on track. As of this morning, the CME FedWatch tool, which uses prices in the Fed Funds Futures market to calculate the market odds for a Fed move, had put the chances of a September 18 cut at 100% with a 78.8% chance that the cut would be just 25 basis points and a 21.2% chance that it would be 50 basis points. The FedWatch Tool calculated the odds of another rate cut at the December 11 meeting (that is one in addition to a September cut) at 93.7% for an additional cut of any size and at 58.5% for a 50 point additional cut beyond a September rate reduction.

There’s also talk/hope this morning in some corners of Wall Street of a return by the Fed to its own program of quantitative easing.

That talk seems to be a reaction to a tweet from President Donald Trump this morning calling for a huge 100 basis point reduction in interest rates and some quantitative easing:  “The Fed Rate, over a fairly short period of time, should be reduced by at least 100 basis points, with perhaps some quantitative easing as well,” the president wrote. “If that happened, our Economy would be even better, and the World Economy would be greatly and quickly enhanced–good for everyone!”

True enough if you believe the slump in global demand would be solved by lower interest rates.

At 2 p.m. New York time the Standard & Poor’s 500 was up 1.28% and the Dow Jones Industrial Average was higher by 1.02%. The NASDAQ Composite had climbed 1.49% and the small cap Russell 2000 was ahead 1.27%.

As you might expect with the hope again the operative mode, the CBOE S&P 500 Volatility Index (VIX) was down 8.55% to 16.89. That brings the “Fear Index” almost back to the 16.12 of July 31. The VIX had soared from there to 24.59 on August 5 and had been at 22.10 as recently as August 14.

Risk havens are down today with gold off 0.93% to $1509.40 an ounce and silver off 1.30% to $16.90 an ounce.

The yield on the 10-year Treasury was up 4 basis points to 1.59%, slightly above the 1.54% yield on the 2-year Treasury.

U.S. benchmark West Texas Intermediate crude gained 2.10% to $56.02 a barrel. International benchmark Brent was ahead by 1.64%

The dollar was higher with the Dollar Spot Index up 0.15% on the day. The Dollar Spot Index is now higher by 3.1% since January 30 and by 2.5% from June 24. To me that argues that the safety of the dollar and Treasuries outweighs the Fed’s interest rate cuts (past and potential.) If President Trump is looking for dollar weakness to offset his higher tariffs, he may have a long wait,