We continue to think that the current crisis lacks a pedigree, and industry leader Jamie Dimon (CEO of JP Morgan) would seem to concur, given that in the wake of stock declines he purchased shares of his company.
El Nino
The US Economy is Slowly Progressing
Just as US scheduled data has continued to be mixed, the Fed had added confusion regarding their intentions on monetary policy. The general consensus is that the US economy is slowly progressing.
Fundamental Track in Favor of the Bear Camp
Just when it appeared that sentiment had reached a trough, the crude oil market dragged commodities down even further.
Additional Commodity Pressure in Anticipation of an Interest Rate Hike
In looking ahead to the coming week, we expect additional commodity pressure going into the FOMC meeting off of a stronger dollar in anticipation of an interest rate hike.
Suspect a Bottoming in the World Economy
Economic prospects have improved over the last two weeks, as crude oil prices have shown signs of declining further, the Fed have minimally downplayed the prospect of a near-term rate hike, and perhaps most importantly, the ECB did “something” to help facilitate growth in the euro zone.
Positive Sentiment Hard to Come By
The US Federal Reserve appeared to be “threading the needle” with their narrative supporting a December interest rate hike, as they emphasized that the future rate path will be slow and gradual.
Impressive Stock Market Rally Has Continued in the Face of Mixed US Economic Data
An impressive stock market rally has continued in the face of mixed US economic data, China continues to show signs of weakness, and the Euro zone isn’t sure if it needs more central bank assistance.
The Situation in China Will Not Have a Major Impact on the US Economy
The Chinese economy continues to be a weight around the neck of many commodities, but another weight, in the form of the US Fed, comes into focus for the coming week.
Commodity Sentiment Was Overdone
We won’t suggest that the recent lows in many commodities are solid, but value-hunt buying of copper assets by Carl Icahn, a $4.00 single-day rise in crude oil prices, and a 1,000-point, 2-day bounce in the Dow suggest that sentiment was overdone on a number of fronts.
Near Term Gains, Deflationary Action Keeping Pressure on Commodities
Despite the best efforts of the left, right and center factions in Greece, the situation there should drift from being a major influence on international financial markets to a second page, sad, social event.