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Trading was subdued yesterday as many were fixated on the 200 day moving average of the S & P 500.  As widely discussed, the index is hovering right at the long term trend line, which represents the average closing for the last 200 sessions.  The slope of the line is downward slopping which is viewed as negative.

Will this week’s data and the outcome of the Fed meeting reverse the slope?

Today retail sales and the produce price index are released.  It was February’s postings of these key statistics that served as the initial catalyst of the current rebound.  Consensus is expecting a 0.2 decline for both core and overall retail sales while the core PPI is expected to rise by 0.1% and the headline number to drop by 0.2%.

Also released are a housing sentiment indicator and a manufacturing index.

Commenting about the FOMC meeting, no change is expected in tomorrow’s announcement but all will scrutinize the post meeting statement and the press conference, a scrutinization that I am certain will produce an infinite number of conclusions.

Last night the foreign markets were down.  London was down 0.63%, Paris down 0.89% and Frankfurt down 0.58%.  China was down 0.93%, Japan down 0.68% and Hang Sang down 0.72%.

The Dow should open moderately lower as the FOMC commences a two day meeting.  Oil is down.  As noted a gazillion times, the correlation between oil and equities is over 90%.  This relationship coupled with central bank uncertainty—defined as if and how many interest rate increases that may occur in 2016—is weighing upon the markets.  The 10-year is up 5/32 to yield 1.95%.

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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.