11 Dec TRADE, SMALL BUSINESS SENTIMENT AND THE FOMC

An argument can be made the proverbial buy on rumor and sell on fact phenomena could occur following the agreement of any trade deal. Yesterday the “New NAFTA” was agreed upon and the markets had little reaction. Can we make the assumption that the averages will trade lower if Phase I of the trade deal with China is agreed upon? I can answer yes.

Radically changing topics, sentiment among small businesses climbed the most in more than a year as more owners said profit trends are looking up and that it is a favorable time for expansion. This subsector of “a good time to expand” is at the highest reading in the 46 year history of this indicator.

Small business hiring remains robust as 61% of respondents reported hiring or trying to hire, an increase of 1 percentage point though 53% reported few or no qualified applicants for the positions they were trying to fill.

During the last era of 4% annual growth which occurred during the second Clinton Administration, 90% of job creation occurred by small businesses, defined as companies that employ less than 400 people.

Yesterday’s statistics was another data point that confirms job creation will remain robust as the transition of money and economic activity returns back to Main Street from Wall Street.

Today is the conclusion of a Fed meeting. Will the Committee draw a similar conclusion? Commenting further about the meeting, no change in monetary policy is expected and as in typical fashion all will focus on the post meeting statement.

To write the incredible obvious, the post meeting statement can affect today’s market close.

Last night the foreign markets were mixed. London was down 0.13%, Paris down 0.01% and Frankfurt up 0.35%. China was up 0.24%, Japan down 0.0% and Hang Sang up 0.79%.

The Dow should open flat ahead of the Fed meeting and lingering uncertainty over trade. The 10-year is up 5/32 to yield 1.83%.

The views expressed herein are those of Kent Engelke and do not necessarily reflect 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 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. The material provided in Daily Market Commentaries or on this website should be used for informational purposes only and in no way should be relied upon for financial advice. Please be sure to consult your own financial advisor when making decisions regarding your financial management. Members of FINRA and SIPC, Capitol Securities Management is a privately owned full-service retail brokerage and investment advisory firm headquartered in Richmond, Virginia. For nearly 30 years, we have been serving the needs of our investors. Today, more than 200 Capitol Securities Management investment professionals and support staff serve approximately 18,000 customer accounts from Southern Florida to the New England coast.