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In My View the Equities Discern Little Difference Between the Term “Considerable Time” and “Patient.”

In my view the equities discern little difference between the term “considerable time” and “patient.”  The S & P 500 had its largest advance since October 2013, the result of the post FOMC meeting statement where the Committee stated “it can be patient in beginning to normalize the stance of monetary policy.”

Consensus had thought the term “considerable period” would be dropped, a view that I did not share because of the collapse of oil and the geopolitical and geostrategic implications.   I do think it is noteworthy the FOMC did remark the new guidance is “consistent” with its previous “considerable time” wording.

I think the new wording offers the Federal Reserve considerable flexibility in its inevitable decision as there are various interpretations of “patience.”    FRB Chair Yellen stated the Central Bank will react to economic data as the data unfolds further stating “the statement that the Committee can be patient should be interpreted that it is unlikely to begin the normalization process for at least the next couple of meetings,” which suggests the first change may not occur until April.

There was no mention of global market turmoil sparked by oil and the Russian currency crisis.

Speaking of oil, oil closed nominally higher, perhaps the result of traders closing out positions before option expiration on Friday.

Will the rally continue today?  The year is quickly coming to an end and typically those issues that have been crushed the greatest stage the strongest rebound going into the rebound.  Was yesterday a harbinger of trading for the next 30 days as energy grossly outperformed?

As noted the other day, the energy sector is priced for an extremely deep recession with the S & P 500 energy sector priced at the lowest level as compared to the S & P 500 since 2000.

Today weekly jobless claims, the LEI and a regional manufacturing index are released.  How will this data be released?

Last night the foreign markets were up.  London was up 1.16%, Paris up 2.72% and Frankfurt up 2.21%.  Japan was up 2.32% and Hang Sang up 1.09%.

The Dow should open sharply higher on the dovish Fed statement.  The 10-year is off 11/32 to yield 2.17%.  Oil is up about $1.25/barrel.

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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.