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The debt and equity markets fluctuated amid the post Fed meeting statement.  The dollar dropped and oil gained almost 6%.

Commenting about the FOMC meeting, the Committee cited potential impact from weaker global growth and financial market turmoil is the basis for maintaining current monetary policy.  Moreover the Committee is now suggesting two interest rate increases instead of four during 2016 with the next possible increase being April.

I must write the Fed did state all is dependent upon the data and will act accordingly.

Oil rose yesterday for a myriad of reasons.  First was the announcement of mid-April meeting of OPEC and non OPEC members to discuss capping oil production.  Second was the oil inventory data where stores did not rise as much as anticipated.  Third the dollar fell because of the outcome of the Fed meeting.

Oil is now up about 45% from its mid-February lows.

Earlier in the week I commented this week can be of significance given the potential headline risk of two major market catalysts…monetary policy and oil.  As written a gazillion times, there is almost a perfect correlation between oil and equities.  There is also an extremely strong correlation between monetary policy and interest rates.

Both appear to be very equity positive.

What will happen today?

Last night the foreign markets were mixed.  London was down 0.28%, Paris down 1.62% and Frankfurt down 1.80%.  China was up 3.56%, Japan down 0.22%and Hang Sang up 1.21%.

The Dow should open nominally lower as Caterpillar issued an earnings warning.  Oil is up about 1.5%, broaching the psychological important level of $40/barrel.  The 10-year is up 12/32 to yield 1.87%.

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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.