There was little reaction to the President’s speech, a rise in crude prices from an eight month low and weekly jobless claims that were nominally higher than expected. Will there be a reaction to today’s release of August’s retail sales data or University of Michigan Confidence survey?
All must remember confidence surveys are the ultimate feedback indicator as they only tells us where we have been not where we are going. Some have attempted to correlate retail sales to such surveys but such correlations are inconsistent.
What will today’s data suggest?
To write the obvious, today many are edge. The reasons range from geopolitical anarchy, to government dysfunctionalism, to bearish fears because the lack of any meaningful correction for at least 2 years.
Reiterating I believe today’s massive levels of cash searching for a more efficient use and reduced leverage are major reasons as to why the odds of a significant market decline defined as greater than 12%-14% are low.
Last night the foreign markets were mixed. London was up 0.26%, Paris down 0.01% and Frankfurt down 0.18%. Japan was up 0.25% and Hang Sang down 0.27%.
The Dow should open little changed ahead of the retail sales data and confidence survey. The question at hand is if the data is a disappointment, will the markets advance under the pretext “bad is good” as it possibly delays the inevitable change of monetary policy? The 10-year is off 5/32 to yield 2.57%.
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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.
