Investors flocking to the equity rally will be disappointed as they’re in direct defiance of the Federal Reserve, according to Morgan Stanley strategists.“Better price action in stocks has started to convince many investors they are missing something — compelling them to participate more actively,” a team led by Michael Wilson wrote in a note. “We think the recent price action is more a reflection of the seasonal January effect and short covering after a tough end to December and a brutal year.” In reality, earnings are worse than expected, especially on the margins front, they said. “Secondly, investors seem to have forgotten the cardinal rule of ‘Don’t Fight the Fed.’ Perhaps this week will serve as a reminder.”

Officials at the US central bank  raised their benchmark federal funds rate by a quarter percentage point, dialing back the size of the increase for a second-straight meeting. The move would follow a slew of recent data suggesting the Fed’s aggressive campaign to slow inflation is working. NN: They wish. Not true recent data shows inflation still driving prices and labor costs higher. Instead at a 7.5% now at 6.5% CPI  rate…….. That is not a success and the Fed ain’t done.