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I am certain the mania surrounding this week’s Fed meeting will rise to a cascading crescendo.  Even though I do not believe in this next comment, to write about anything else would be essentially meaningless.  I again ask if a 0.25% increase makes a project economically unviable, why build that project?

To reiterate, the markets have been co-opted by cross correlated technology based trading where interest rates are a primary variable.  Higher interest rates dictate lower prices thus the intense focus.

Will the Fed act?   Unfortunately Wall Street has been spoon fed by the Federal Reserve and many market participants believe the central bank is both omnipotent and omniscient, either of which is true.

What makes the Federal Reserve different than their private sector brethren is its ability to target short term interest rates.

Consensus is expecting no change.  The futures markets is suggesting less than a 14% probability.

Last night the foreign markets were up.  London was up 1.42%, Paris up 1.49% and Frankfurt up 0.81%.  China was up 0.77%, Japan up 0.70% and Hang Sang up 0.92%.

The Dow should open moderately higher on speculation that the Fed will remain unchanged Wednesday.  Oil is higher on speculation of next week’s OPEC meeting in Algiers.    The 10-year is unchanged at 1.69%.

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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.