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Monday was the slowest trading day of the year.  Yesterday was the second slowest according to CNBC.  Today is the conclusion of the two day FOMC meeting.  No change is expected but as written a gazillion times the post meeting statement and press conference will be infinitely dissected.

The two primary determinates of market direction is oil and monetary policy.  Oil was down again yesterday as Iran stated it will not limit production.  Saudi Arabia, Russia, etc. has announced their intentions to cap production at current levels, a policy that I think is symbolic in nature as neither country has the funds to explore for more crude.

I thought it was significant yesterday that Iraq reported its crude shipments fell nearly 500,000 barrels during the first two weeks of March from February’s level because of “pipeline disruptions through its Kurdish pipeline into Turkey.”  Iraq’s production was down 175,000 in February because “declining yields and lack of infrastructure investment” according to the Iraqi oil minister.

I rhetorically ask is the narrative changing in oil/equities believing that supplies will inevitably drop ultimately creating the next potential boom?

Commenting about monetary policy, I am certain the Committee will state monetary policy will be determinate upon the data.

Speaking of data, the inflation and the retail sales data were mixed.  Last month’s sales data had a large downside revision thus questioning the strength of the consumer.  Regarding inflation, the PPI ex food, fuel and trade rose 0.1% and limbed 0.9% from February 2015, data that is not threatening.

Was yesterday a quiet day?  The Dow was virtually unchanged but the NASDAQ fell about 0.50%, the result of a sell off in biotech shares.

To write the incredibly obvious, today’s trading will be influenced by the 2:00 FOMC statement.

Last night the foreign markets were mixed.  London was up 0.16%, Paris down 0.11% and Frankfurt up 0.36%. China was down 1.02%, Japan down 0.83%and Hang Sang down 0.15%

The Dow should open flat even though oil is higher by about 2% as it was announced OPEC and non OPEC countries plan to meet next month to cap production.   There was also an inventory survey that stated inventories grew less than expected. The 10-year is up 5/32 to yield 1.96%.

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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.