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Equities sputtered as some of the central bank euphoria waned. Oil fell about 3.5% after advancing earlier by almost 3% on confirmed reports by both The Financial Times and Reuters that Saudi Arabia agreed to cut daily production by 1 million barrels to around 9.5 million barrels if Iran kept its daily production unchanged at August’s level of 3.6 million.  These stories were disavowed by a Saudi spokesperson.

According to the IEA, the oil market is oversupplied around 500,000 barrels

However by midafternoon the production cut/freeze story was resurrected by “two people familiar with the negotiations” stating that any formal decision will be made when OPEC meets again in two months.

As written Friday there is little conviction of agreement in this week’s meeting thus begets the question why the volatility?  Three weeks ago there was a record short interest in crude and any type of positive news will generate an outsized response.  Moreover trading/volatility is greatly influenced by technology based trading platforms.

Earnings season is quickly approaching.  Will there be any high profile warnings?

This week the economic calendar is heavy.  There ae numerous housing statistics, manufacturing information, various diffusion and spending indices and the final estimate of second quarter growth.   How will the data influence trading and monetary policy expectations?

And then there is the election?  How will tonight’s debate be interpreted and will these interpretations influence the market?

Last night the foreign markets were down.   London was down 1.15%, Paris down 1.65% and Frankfurt down 1.51%.  China was down 2.07%,  Japan down 1.25%and Hang Sang down 1.56%.

The Dow should open moderately lower ahead of tonight’s debate and a meeting between major oil producers.  The latest polls indicate a dead heat between Trump and Clinton.    The 10-year is up 4/32 to yield 1.60%.  Oil is up about 1%.

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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.