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Market Commentary The two day FOMC meeting commences today. The two day FOMC meeting commences today. All are expecting little change especially following Presidents’ Obama’s admonishment to his G-20 counterparts ahead of this weekend’s meeting not to remove fiscal and monetary stimuli prematurely. So the question is what will the FOMC tweak? Will FOMC officials lower their growth forecasts or will the Committee maintain its description of the economy that it is “continuing to strengthen” and the labor market is “beginning to improve?” What about inflationary pressures? It seems an eternity since the April 27-28 FOMC meeting. The sovereign debt crisis intensified but has calmed as of late, domestic data has been mixed with a decidedly weak employment report. There has been virtually no inventory restocking, consumer confidence is up and inflationary pressures have been virtually nonexistent. Earlier in the year I thought the odds were around 50% monetary policy would be changed by summer. It appears at this juncture the term of “extend period” will be used again to describe the timing of this inevitable change in monetary policy. Over the weekend Barrons reported JPMorgan revised its outlook for the first hike in Fed policy to the fourth quarter of 2011 from the second quarter. Earlier in the spring JP Morgan had thought a change would occur by December 2010, a view that coincided with April’s fed funds futures market. Incidentally this market of prevailing public sentiment is now looking to May 2011 for the first increase in this key rate. The post meeting statement will occur around Turning to yesterday’s market action, stocks retraced moderate gains in the last hour of trading to close nominally lower. Did algorithmic trading negatively impact trading as the S & P 500 failed to remain above a key technical level? Probably. What will happen today? The Richmond Fed Index and existing home sales are released. How will this data influence trading? Last night the foreign markets were down. The Dow should open nominally lower fearing the potential impact of a global reduction in government spending and globally tightened bank rules. I ask is this what is needed to ensure a better tomorrow? The 10-year is up 8/32 to yield 3.21%. The information is the personal views of Kent Engelke and is not necessarily indicative of those of Capitol Securities Management. The information contained herein has been compiled from sources believed to be reliable; however, there is no guarantee of its accuracy or completeness. Any opinions expressed here are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. Capitol Securities Management, Inc. is a Mid-Atlantic based, privately owned brokerage and investment firm with branch offices in Mclean and Richmond, VA, Boston MA, Hickory, NC, Florham Park, NJ and Tampa, FL. Capitol employs over 170 fulltime investment professionals and independent affiliates in locations from New England to Florida and has been serving the needs of its investors for over 25 years. It is a member of FINRA and SIPC. © Copyright 2008 Capitol Securities, Inc. All Rights Reserved. |
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