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Markets were Relatively Quiet as a Drop in Energy Shares Offset Speculation the Federal Reserve will Keep Rates Lower for Longer.

Markets were relatively quiet as a drop in energy shares offset speculation the Federal Reserve will keep rates lower for longer.

Commenting upon the Fed Minutes, for the first time since 2008 the FOMC considered risks to be “nearly balanced.”   Perhaps the only concrete statement to make is the timing of a change in monetary policy is about as lucid as it was before the Minutes were released.

Regarding oil, there are many analysts who are predicting the oil rally of recent weeks is not going last.  I generally disregard the “noise” and focus upon the geostrategic and geopolitical issues to for an opinion.

Perhaps the only comment I place any confidence in is the one made by OPEC’s General Secretary who has stated several times crude’s floor is around $50 and should slowly rise over the coming months.  OPEC produces about 25% of the world’s crude.

Regarding the geostrategic/geopolitical environment, because of the lack of leadership, the Middle East is going from extreme violence to almost anarchism where the basic standard of human decency has been abandoned to Islamic fanaticism.  Perhaps the only positive comment to make at least several Islamic states is forcefully confronting these abhorrent groups.

I will argue it is not if there will be a major supply disruption but rather when.  To behead 21 Christians or burn alive 17 Kurdish soldiers are acts of barbarism not witnessed in over a century.

I cynically ask and quote Secretary of State  Kerry’s March 2014 statement “You just don’t in the 21st century behave in 19th century fashion” as a symptom of the issue facing the western world.  Violence and hatred has existed since eternity and will continue to exist until there is divine intervention to end such.  Idealistic elitist language will only accentuate and incite the environment.

What will happen today?  The LEI and Philly Fed are released so is weekly jobless claims.

Last night the foreign markets were up.  London was down 0.03%, Paris up 0.47% and Frankfurt up 0.05%.  Japan was up 0.36% and Hang Sang up 0.19%.

The Dow should open quietly lower as Germany rejected a proposal from Greece to seek an extension of its loan facilities from euro-area creditors.   The 10-year is unchanged at a 2.08% yield.

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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.