Markets waiting with bated breath on Federal Reserve

Stock Indices:

The Dow Jones 30 Industrial average closed Friday at 15,558.83, up 3.22 and for the week gained 0.10%. The S&P 500 closed Friday at 1,691.65, up 1.40 losing 0.03%. The tech heavy Nasdaq closed at 3,613.16, up 7.98 and for the week gained 0.71%. The best performer in the Nasdaq was Activision Blizzard Inc. gaining 15.02% and the worst performer was Expedia Inc. losing 27.38%. the Thomson Reuters/University of Michigan’s consumer sentiment index of 85.1 was the highest level in six years and prompted the rally Friday. We continue to believe the U.S. economy is entering a new recessionary phase and implore holders of large equity portfolios to implement strategic hedging programs in order to offset to some extend the sharp market correction we see in the future. We can provide information to those investors as to establishing programs specific to their requirements.


The September U.S. dollar index closed Friday at 8173.5 down 31.8 points as investors stepped back pending the Federal Reserve’s monetary policy statement on Wednesday. Also on the calendar is the Friday key jobs report for July. We had suggested taking profits on the dollar and would now remain on the sidelines pending further clarification of the U.S. Federal Reserve statement. However, relative to the economies of the U.S. global trading partners, the U.S. economy is in better condition financially. That does not mean we favor the rhetorical statement from Washington pointing an "economic recovery". For now we like the sidelines. On Friday the Euro closed at $1.3283, up 37 points, the Swiss Franc $1.0776, up 39 points, the Japanese yen $.010182, up 136 points, the British pound $1.5383, up 28 points the Canadian dollar 97.23c up 13 pints and the Australian dollar 9240c up 58 points. Stay on the sidelines for now.


September crude oil closed Friday at $104.70 per barrel, down 79c after trading as low as $103.90 during the session. Over the past few weeks crude has gained approximately 15% tied to the concerns that the current strife in Egypt could result in the possible closure of the Suez canal. With the Syrian and Egypt situations we are on the sidelines but our overall view is negative tied to basic supply/demand criteria. The manufacturing sentiment for China is negative and as one of the largest users of energy, supplies are more than adequate giving us our bearish view.


September copper closed Friday at $3.1070, down 7.985c tied mostly to the lack of buying by China, the second larger user of industrial metals behind the U.S. Copper prices have dropped 15% this year and we have been bearish the entire time. We had suggested recently taking some profits "off the table" but maintaining some put positions. Our opinion remains negative.

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