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As expected trading was quiet as the bond market and banks were closed for Columbus Day. The dollar fell to a three week low as all are reassessing the probability of a change in monetary policy this year even as several Committee members are suggesting a 2015 increase is indeed plausible.
The Yuan jumped the most since March and speculation of additional stimulus boosted Chinese shares. Oil pared some of last week’s gains as OPEC reported its members pumped the most crude in three years.
Earning season returns today as over 35 S & P 500 companies post results this week including Johnson and Johnson, Intel and JP Morgan. All will scrutinize the results to determine the impact of higher dollar, slowing foreign markets and potential wage inflation that may erode margins.
Tomorrow there are several pivotal economic releases, including retail sales, the PPI and the Beige Book. Has the drop in oil translated into a boon for the consumer? Earlier in the year most had forecasted a rise in retail sales as oil plunged. It did not occur. Sales ex auto are expected to drop by 0.1%.
Continuing with the oil theme, Producer Prices are expected to decline by 0.2%, ex food and energy up 0.1%. And then there is the Beige Book or the statistical compilation utilized at the upcoming Fed meeting. How will the Executive Summary be interpreted?
Last night the foreign markets were down. London was down 0.78%, Paris down 1.23% and Frankfurt down 1.0%. China was up 0.17%, Japan down 1,11% and Hang Sang down 0.57%.
The Dow should open nominally lower after weaker than expected export data reignited growth concerns. Earnings released this morning indicate the negative impact of a rising dollar. The 10-year is up 8/32 to yield 2.07%.

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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.