It would appear the case for a September hike is scuttled unless Brainard is utterly ignored by the FOMC. Brainard issued the most dovish statement in months, not surprising for a dove I suppose, but it is boosting stocks on top of their already sharp rebound gains.
SP500 31.00, 1.46%
NASDAQ 80.03, 1.56%
DJ30 239.28, 1.32%
SP400 1.12%
RUTX 1.04%
SOX 1.84%
A quick synopsis:
Brainard stated the Fed should use 'prudence' in its policy and the case to tighten preemptively is 'less compelling.'
Fed should worry more about guarding against the downside.
Fed should be more concerned about undershooting inflation.
She also reached overseas, an oldie but a goodie, stating that weak demand abroad will weigh on the US and that Japan and Europe are struggling. Indeed, Japan is 'greatly challenged' and European growth is slow. But I though CNBC was telling us Europe was doing great?
So, the manic drive for yield continues. Even oil is back up, reversing off early weakness to sport gains.
We banked some gain on NPTN, got out of some C early but of course it has now reversed. We are watching right now just what really makes some important reversal moves or at least can hold them.
Sharp selling Friday on fears the central banks would actually hike rates or were less committed to printing money. Then a panic surge back upside on fear of missing out if the central banks don't hike. The absurdity is noted by all -- as they rush to jump back in. Again, we will see what looks to have truly reversed as the session heads into the last hour and frankly after a review of the patterns given the jerk lower and jerk back upside.
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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