The Fuse
Futures are rising a bit this morning, recovering Tuesday’s losses. Today’s Fed meeting and the subsequent statement are likely to shake things up a bit.
Interest Rates are modestly lower this morning as bonds are stable. Yields rose on Tuesday.
With low market volatility there seems to be no preparation for a surprise this Fall. That is a bit concerning here with markets sitting in a precarious spot.
Earnings from FedEx later tonight along with KB Home will give us a good read on the consumer and housing.
The big day has finally arrived! Fed Day. Later on we’ll have a decision on monetary policy, many are expecting no change in rates (a pause), but perhaps the language or the follow-up press conference could yield some market activity.
As to sing the same tune over and over, breadth was simply bad. Even as the markets tried to regain some lost ground the sellers were still out there. 16-12 on the downside, most days so far in September have been negative readings. It will eventually matter.
Distribution day for the SPY and IWM, with higher turnover on these indices than the prior day. Markets are just about in correction mode, and if the Fed’s statement is not sufficient then we could be headed in that direction before month’s end.
No changed in the range-bound market. Still stuck between 4600 and 4330 in the bigger picture, but the Russell 2K (IWM) is breaking support, which could be dangerous as the Russell often leads.
The Internals
What’s it mean?
The internals show it was nearly a repeat of Monday, but the price action was strikingly different. At one point, the SPX was down nearly 1% and the Nasdaq was actually down that much. VOLD was down but not charging lower, while the VIX was heading downward from this highs all session long. Volatility sellers were active again. Ticks again were red and reflect plenty of sell programs.
The Dynamite
Economic Data:
- Wednesday: FOMC rate decision and economic projections, crude oil inventories
- Thursday: Jobless claims, Philly Fed Index, existing home sales, leading indicators
- Friday: GlobaL Flash PMI
Earnings this week:
- Wednesday: GIS, FDX, KBH
- Thursday: DRI, MANU, RAD, FDS
- Friday:
Fed Watch:
Another important Fed meeting this week where policy changes will be discussed. The latest readings on inflation cannot be encouraging to the committee, but still the Fed Futures market is expecting another pause in their hiking campaign. It’s hard to think they would be less aggressive here, especially with a roaring economy that just won’t let up. The only positives the committee could see is maybe the jobs market is cooling down some. We’ll be paying very close attention to the new economic projections.
Issues/Stocks to Watch this week
Market Volatility – We have a big fed meeting this week and the market is sanguine. Therefore, it sets up for some surprises, so be ready for them.
Tesla – The EV car maker may have a slight advantage here as the UAW strike starts and hits Ford, GM and others. The company has been cutting prices lately to reduce inventory and that will hit their margins, but the stock is bouncing around in a range. Not horrible yet.
Dollar – The greenback has been remarkable this year, the best performing currency by far. We’ll be watching for a peak and turnaround if the Fed is much less hawkish in their statement and projections.
