Hey folks, we are now moving into the fourth Quarter which is typically a strong momentum period for the US Markets…but keeping in mind what happened during the fourth Quarter last year will put some doubt inside many investors heads…last week we saw a wide swing in price action and I suspect this activity will continue for the near term. The US markets are still growing, but just more slowly. Enjoy this week’s round-up.
Weekly Sound-Bites:
• The kick-off to October surely started on a sour note and it tends to fit the pattern that shows October tends to be one of the most volatile months of the year….we saw heightened impeachment fears, more tariff against Europe, Honk Kong protest continue to escalate and US Economic Data showing growth is slowing….only the tail end of the week with a semi decent Jobs numbers did the tide tend to lift price action higher to allow the week to close closer to where it started…ISM Data came in at 47.8 which shows an official contraction in manufacturing data and the lowest reading here in the US since 2009…on Friday we got upward revisions in Job Data and showing 136K jobs added in Sept and a spectacularly low unemployment rate of 3.55, the lowest since 1969…
• So to net out the picture we are seeing from this past week’s US Economic Data is that the economy is still growing, just a bit slower…the slowing growth could more than likely be from the FEDs raising interest rates over the past few years (remember, it takes more than a year for higher rates to filter down into the economy) as well as the Global Trade Tariffs that have been in play for over a year…
• All this data has washed up on the FEDs windshield and as such, the markets are pricing the probability of another 25 bps at their Oct meeting by about 80%…we may even see the FEDs inject more liquidity in the US Balance sheet as well to help loosen the money supply, or more specifically, the supply of US Dollars…and with inflation not showing up on anyone’s forecast, makes it easier for the FEDs to cut another 25 bps to help the Bull markets continue…
• The New York Fed’s model puts the odds of a recession at 38% which of course means there is a 62% chance there will not be a recession in the next 12 months and that is the camp I am current residing at this time…as I had indicated before, the US Economy is still growing, but at a slower rate…The Global economy continues to add stimulus the markets with over 33 interest rate cuts by major Global Banks and let’s not forget that here in the US, a year ago the US 10 Year rates stood above 3% and are now down to 1.51%…to me the biggest surprise to he interest rates here in the US will come if or when German decides to add more stimulus to their economy…this will drag our rates up or down along with theirs…
Enjoy this Weekly Round-Up Update;
Don’t Be A Rat Brain Trader – Be the Red Stripe Zebra !!
Trade Smart !
hpb
