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The abbreviated week’s calendar has little important data. The economic news last week leaves open the timing of the next interest rate increase. As vacationing market participants yawn their way back to their desks and trading floors, what will be the focus? A look at the calendar and the end of summer will have them asking:
Should we expect in September morning?
I borrowed the title from Alan Steel’s excellent post on this subject. More from him in conclusion.
There was a lot of important economic news. The picture was mixed but most promising. The Fed can move in September or delay until December.
In my last WTWA, I predicted another weeklong focus on the Fed. I expected every economic data point to get special attention, passed through the perceived eyes of the Fed. This was the story all week – even on the quiet Friday afternoon. I asked whether the Fed would get a signal to hike rates. At the end of the week, most were answering “no.” I have had a good streak going on, guessing the theme, but the week ahead is really challenging.
The Story in One Chart
I always start my personal review of the week by looking at this great chart from Doug Short. The overall range, once again, is very narrow. Doug’s take is that the market liked the slightly weaker than expected report, observing as follows:
The “bad news is good news” syndrome once again reaffirms the market’s primary dependence on Fed pampering via low rates. The index hit its 0.65% intraday high about 30 minutes into the session. Profit taking sent the index to its 0.13% intraday low in the early afternoon. But the buying returned, and the 500 ended the session with a 0.42% gain.
Doug has a special knack for pulling together all of the relevant information. His charts save more than a thousand words! Read his entire post where he adds analysis and several other charts providing long-term perspective.
For some upcoming events that might be interesting to WTWA readers.
- It is Labor Day weekend. Like you, I am enjoying some family time. Because the employment report is so important to markets, I will publish a little quiz to test your Jobs IQ. It will not be easy. You may keep your results secret or else boast about your knowledge!
- I am joining an outstanding group of fellow advisors in a webinar this week. It will be on Wednesday, September 7th, at noon EDT. (Sign up here). We meet regularly for our own benefit. This time our leader, Rob Martorana, felt that others might learn from the interchange. The subject is how to interpret financial news. The material is great, and I am looking forward to participating. Please join us if you can. If you miss it, check out the original article. If investors find this to be useful, we will do more.
Each week I break down events into good and bad. Often there is an “ugly” and on rare occasions something delicious. My working definition of “good” has two components. The news must be market friendly and better than expectations. I avoid using my personal preferences in evaluating news – and you should, too!