Monday, August 29, 2016

S&P 500 Should Hold Up This Week In Front Of Jobs

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*Fed Chair Yellen said less than expected in her speech, which could give support to markets in the very near term.
*The most important economic number is Friday, non-farm payrolls.
*Fed speak, though medium term points to economic hopelessness.

We said last Sunday we expected "down stocks" for the week. After The S&P 500 ETF SPY reached a high for the week on Tuesday at 219.60 it proceeded lower all week to close at 217.28. For now we think markets this upcoming week can hold up.
We have an important week following Fed Chair Yellen's anticipated speech last Friday. She said much less than expected but points to longer term problems in the US economy. In the near term non-farm payrolls Friday are key. The report sent markets up the last two times they reported. A strong jobs number will confirm a likely rate hike September 21st. After the disappointment in shorter term guidance from Fed Chair Yellen we'd expect markets could hold up and then get defined by the jobs numbers Friday.
Fed Chair Yellen's Main Message
1. Shorter Term: A strong jobs number Friday will mean a rate hike September 21st.
2. Longer Term: The economy is in a secular slowdown and cyclical monetary policy is less potent. That is a longer term risk to markets.
For now though the Fed left the window open to keep investors doubting a Fed move which can hold markets up this week.
This Week's Key Events
Monday
PCE Price Index: This is the Fed's key inflation measure. CPI came down in its last report largely because oil was down from June to July. Therefore this number may also have less of a chance for upside surprise.
Here is the recent annual trend that the Fed constantly refers to. This number reports on Monday.
PCE (annual %)JanFebMarAprMayJun
PCE price index real yoy1.71.71.61.61.61.6
PCE price index yoy1.61.00.81.10.90.9


The Fed's inflation target is 2%. Multiple Fed governors came out recently saying we are approaching the 2% mandate. They are referring to the 1.6% that was reported the last few months.




Chaim Siegel has been working with hedge funds and mutual funds as an analyst and PM his entire career. Chaim specializes in earnings and predicts, analyzes and reacts to earnings and earnings events as well as developing current company stories with a hedge fund perspective. If you want his analysis real time sign up to the right for real time email alerts. #in, $spy, $qqq, $iwm, $vxx, $ycs, $fxe, $EUO, $YCS, ^GSPC, INDEXSP:.INX, #elazaradvisorsllc, CME Globex: ES Disclosure: These trades can lose you money and principal especially when using leverage BY USING THIS SITE YOU AGREE TO TAKE ALL RESPONSIBILITY FOR YOUR OUTCOMES AND LOSSES AND HOLD BESTIDEAS, ITS CONTRIBUTORS AND ELAZAR ADVISORS, LLC HARMLESS

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