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Welcome to December.

Welcome to December.  According to Bloomberg the S & P 500 has advanced each December for the past six years.  Will 2014 make it seven?

As widely discussed the averages have staged a handsome rebound from their mid-October lows albeit this rebound was not necessarily broad based with several sectors (i.e. oil and commodities) were actually decimated.

Will yesterday’s losers be tomorrow’s winners?  Most will agree the negative narrative surrounding oil, et al. is intense.   I will argue if the narrative ceases, prices could rebound under the simple guise all sellers have been exhausted and the sector is so vastly oversold, any change in sentiment may have an amplified impact.

Conversely, I think the general market is overbought however markets can be overbought or oversold for a prolonged period.

I have been writing growth has generally surprised on the upside, albeit there has been some statistics that have weakened this stance.  This week is a data filled week that can either validate or nullify this view.   If the statistics are surprisingly strong, the monetary time table may accelerate.

Data released include the ISM, many employment reports including Friday’s inclusive BLS report, the ISM non-manufacturing index, trade balance, consumer credit, factory orders and the Federal Reserve’s Beige Book of economic statistics utilized at the upcoming FOMC meeting.

To write the incredibly obvious, this data will influence trading and monetary policy assumptions.

Last night the foreign markets were down.  London was down 1.03%,  Paris down 0.41% and Frankfurt down 0.35%.  Japan was up 1.23% and Hang Sang down 0.07%

The Dow should open moderately lower on declining oil prices and a disappointing Chinese manufacturing data point.  The 10-year is up 1/32 to yield 2.16%.

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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.