With the Fed taking a pass on hiking rates in September, a reduction in their 2016 and 2017 growth forecasts, and only minimal dissension within their ranks against a steady policy stance, it appears that they are not confident enough in the pace of US growth to make a move at this time.
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Markets Poised to See Declines in Equities, Gains in the Dollar
An important junction lies ahead as fears about China have returned to the marketplace despite two days of Chinese holidays finishing out the 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.
Ongoing Evidence of Slowing in China
Bearish sentiment toward China, equities and commodities is clearly justified in the wake of ongoing evidence of slowing in China, consistent deflationary signals from the crude oil and copper markets, and weak global shipping rates.
What Will Keep China From Becoming the Next Global Headwind?
Outside Market Forces Weigh Heavily on Commodity Prices
In all markets, there are inside market forces and outside market forces. What outside forces are affecting physical commodity prices?
Global Macroeconomic Prospects Are Improving
With a number of longer-term moving averages signaling reversals in several currencies, fresh record highs in a number of global equity market measures and crude oil prices managing to hold $10 to $12 a barrel above their 2015 lows, global macroeconomic prospects are improving.
Positive Shift in Demand Prospects
While the latest string of US economic data sparked some concern over growth prospects, there have been a number of bright spots from China and the Euro zone.
Negative Psychology From First Quarter to Remain
While US economic activity appears to have faltered a bit, evidence of recovery in the Euro zone is starting to surface.
Global Economic Condition Remains Suspect
From the recent action in Treasuries, stocks and physical commodities, one could come to the conclusion that the global economic condition remains suspect.