Today’s Spotlight Market
Tuesday saw a huge slew of economic data being released but overall little that may hold sway on Fed officials in regards to a change in interest rate policy at the September Federal Open Market Committee Meeting (FOMC). Consumer prices (CPI) for July were unchanged which match analyst?s estimates. Striping out the volatile food and energy sectors the CPI was up a modest 0.1% due to a 1.6% decline in energy prices. U.S. Housing starts were up 2.1% in July, with bucked the consensus for 0.8% decline. U.S. Industrial Production also produced a moderately positive surprise rising 0.7% last month, while July Capacity Utilization also was higher rising be a larger than expected 0.5% to 75.9% in July.?? ?
Fundamentals
The U.S. equities market has been rather tame the past 6 weeks as it appears that investors and traders are on an extended ?holiday? this summer. However, similar to the Atlantic Hurricane season which tends to peak in September, one has to wonder whether market participants are becoming too complacent as September approaches. The so called ?fear indicator? as measured by the volatility index or VIX is currently hovering near its lowest levels of 2016 as the S&P 500 index has been in a slow grind higher since mid-July and daily trading ranges have narrowed.? The last time the VIX was near current levels was nearly one year ago in early August when the index fell below 11.00. While we must disclose that past performance is not an indicator of futures results, it was only a few weeks later in 2015 when we saw the VIX spike above 50 as the S&P 500 fell by over 200 points in a weeks? time. While few analysts expect anything like the extreme move we saw last year, traders should keep in mind that we are heading into the home stretch of a contentious Presidential election as well as an important FOMC meeting in September where some traders believe the Fed may actually consider raising interest rates should economic data warrant while the market is only currently pricing in an 18% chance of a rate hike at the September meeting according to Fed Funds futures. Traders may wish to enjoy the quiet while it lasts as just like the Atlantic Hurricane season, the equity markets may start to see some rougher waters as September approaches.???????? ?
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