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Equities advanced the most in eight months after a dovish tone from the Federal Reserve chairman fueled speculation the central bank is closer than thought to pausing on rate hikes.  FAANG led the markets higher.

The Chairman said the economic outlook remains “solid,” bolstering expectations for a rate hike when the central bank meets next month, but he noted that effects of higher rates take time to show up in the data.  All told, the markets surmised the Fed is likely to reduce the number of hikes or outright stop them next year.  At this juncture the market is expecting between two three increases.

The Chairman reiterated past remarks of all Fed chieftains that the policy is data dependent.

Are the gains sustainable?  Myopic attention will now be focused upon the G-20 meeting.  Will there be any substantive policy changes? 

Last night the foreign markets were mixed.  London was up 0.48%, Paris up 0.51% and Frankfurt up 0.11%.  China was down 1.32%,  Japan up 0.39% and Hang Sang down 0.87%.

The Dow should open moderately lower with some suggesting that yesterday’s advance was overdone.   The 10-year is up 11/32 to yield 3.03%.

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Ken Engelke

Chief Economic Strategist Managing Director

The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. 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. This material is being provided for informational purposes only. Any information should not be deemed a recommendation to buy, hold or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. This report is not a complete description of the securities, markets, or developments referred to in this material and does not include all available data necessary for making an investment decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. If you would like to unsubscribe from this e-mail distribution, please reply to this e-mail and indicate that you wish to unsubscribe in your response.