This week brought early jitters as investors coming into the fray appeared to reevaluate the economic situation ahead of the Fed meeting. Last week’s employment situation report was a bit of a shocker for some by coming in with fewer job losses than expected. Unfortunately, most of the economic indicators seen last week are still missing the major component of recovery – growth.
Improvement from year-on-year losses or record lows is likely an important step towards a positive and strong economy, but it’s a baby step. Job creation rather than job loss will still be the headline to keep an eye out for, and that is probably what spurred the early week losses more than anything else.
Today, investors will look forward to the Fed decision. I would anticipate that this will be anti-climactic at best. There has been a maintained slow hum of repitition from the Fed since they last adjusted rates. They remain committed to holding the rates near zero as long as requried to allow the economy the opportunity to come back in full bloom. This afternoon’s announcement will likely be more of the same. Chances are, they will also be reluctant to commit to an overall view of if or when recovery will present itself.
A drastic improvement in the economic condition of the nation is not likely to present itself this week, so look for the market to continue forging a new channel. This week’s retail sales report will probably offer the best opportunity to lift things from the doldrums. Some forecasts are calling for a third-straight rise in sales powered by new car sales. If dealers were able to boost sales it may temporarily lift the market and spirits. It remains possible that the weaker condition of the labor situation may have weighed upon that number, excluding autos.
As the summer draws closer to its end, it may be interesting to see how the market reacts closer to Labor Day Weekend. It was around that time last year that the market really started to show the effect of the recession – which had begun nearly nine months earlier. Watch for the VIX to likely start showing an inclination to move higher as there may be an influx of hedges ahead of this “anniversary”.
Past Performance is Not Indicative of Future Results.
Past Performance is Not Indicative of Future Results.
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