Pent-up passions are a bit pressurized ahead of Chairman Powell's well advertised testimony on Capitol Hill. So presuming the Fed 'road ahead' is simply described as responding to economic conditions according to their ongoing monetary policy assessments; that will be a compromise position.  

 (Nevertheless, 'now' the Fed is justified on cutting based on 'data'.)

 It is reasonable that the Chairman acknowledge the sluggishness in the US economy; although given that he 'spun' last year's already evident slippage 'as robust growth' when the nuances of decline (even recession) already in my view were apparent; he may skew his comments about 'newly evident' signs of sluggishness so-as to not admit the December 'hike' wasn't justified at all (which it was not).  

So this is a conundrum for a couple reasons: a) the Fed tried masking their logical need to keep rates up to move paper off their Balance Sheet; b) they decided to 'spin' the reason 'as if' there was ongoing growth in concealing the real reasons from general public consumption; and c) they made the President's anger 'warranted', when he said the Fed shouldn't have hiked; with finally d) the President unable to say was likely seriously indicate 'why' he knew the Fed hike wasn't justified; because that would mean he'd have to acknowledge the economy was eroding, which also contradicted public statements.  

So he 'and' the Chairman both pretended the economy was really growing, and at some sort of feverish pace, which was anything but accurate. That's what I warned about last year, and why I thought we'd get the capitulation in the latter part of the year as well. Now, 'if' everything goes reasonably well, it is not impossible that (as I have also contended likely) we get a 'Recession', by official declaration, just about the time it's preparing to trough-out ahead of a better 2020. And it all coincides with our calling 2019 a 'transition' year.     

(For new readers: distribution and a contracting economy is something I outlined ongoing in 'rinse & repeat' rallies, ever since March of 2018. And it followed the internal market top indication in late January of 2018; then of course the Maytag 'rinse & repeat' series of alternating shuffles ahead of the later additional warning in September when I returned from Europe, of a coming 'crash', which would take us down into December which it did. The rest you likely know well; which was the turn-up; the April-May top; and the intermediate decline with the June rebound; expected into early-mid July.)

Going forward .. there are a lot of bears around 'now' and a bifurcated S&P prevails, when you go outside the dozen or low big-cap leaders. Money has gravitated also into a lot of defensive cyclical sectors; and those seem fairly fully-priced now too. So it's choppy; there are isolated pockets of stronger, as well as weaker, stocks; and the general S&P has limited potential on any rebounds. Depending on the Fed testimony, you could get some relief.  

However, there's such unanimity about a rate-cut this month taking-back the December hike, that it may not get much reaction beyond relief (perhaps we get the cut, despite the President putting more public pressure on the Fed Chairman which in-theory should have the Fed reasserting independence). Of course the Chairman will likely reiterate 'independence' but cut anyway; because that's absolutely reasonable given actual economic conditions. It's not necessarily going to help the Dollar, competitiveness or attract funds at a faster pace to the U.S.; however it may not hurt much given relativity to a slew of countries engaged in a 'race to the bottom' (or below) in their policy moves, which we have believed are counterproductive.

In sum: while the U.S. Fed 'tries' to resist the race to the bottom monetary policy global trends, it's sort of in a catch-down mode that really isn't terribly helpful, and continues what I have termed merely 'pushing on a string'.   

Meanwhile the New York Fed indicator of 'historical recession' probabilities suggests we're either moving towards one; or already in it. This is what I've contended for over a year, irrespective of calling stock market moves in both directions; as throughout this period the market and the economy really did not move in unison; even if some analysts (and the President) seemingly do not grasp the market as a discounting mechanism ahead of cyclical shifts.  

Bottom line: in a perfect world (a trade deal with China would help, but isn't certain) we'd find December's nailed washout bottom as being the cycle low; with a pullback having been the projected late May S&P 2720-50 targeted low a 'test' of December's low.

 As we meander with corrections this Summer and Fall, it should take us to a more stable position, where stock markets can be 'pressurized' again, taking the S&P higher in 2020. Certainly that would play well with the President's reelection bid, as odds of unseating a President in a strong economy are so low historically. This economy has lots of jobs; but not household income at a high level; and that's why you have such focus on jobs as well as efforts to push minimum wages higher (which are still impossibly low in most cities in this expensive day and age where few millennials can afford decent living standards in major cities unless they have significant income levels). It's the working class, not so much the professional class, that's really struggling.  

Again if all goes right we'll see corrections as outlined well-in-advance, but a general avoidance of catastrophes, barring exogenous events like war (or a serious confrontation rather than collaboration with China). In the meantime there's little if any room for multiple expansion. Stay nimble and defensive.