Thursday
September 17, 2015
1-855-RWT-0008
Yesterday and Today
Yesterday
The market started out slow and unchanged on the open. Then rumors took over that American troops entered Syria, and this caused oil to spike dramatically higher. Once the oil futures started to climb so did our E-minis as Dow. It was not until the close that the Pentagon stated that the rumors of American troops in Syria was not true.
Of course it wasn’t true. There are not American troops ever going to be in Syria, at least for another 2 years. If we can’t attack Iran or N. Korea which are direct threats to us, we are not going into Syria.
TODAY
It is all resting on the Fed today. I expect the market to be boring and gyrate around aimlessly as traders clean up positions prior to the Fed announcement at 2:00pm.
I am of the opposite mind of most people on what the Fed does today. Perhaps the Fed members are too out of touch with the world while being driven around by the Secret Service, eating 3 Star French meals (5 star equivalent in US), and hanging around with academics talking about theoretical ideas. But I am giving them the benefit of the doubt in their ability to read a simple chart.
For almost a month now we have been sold on the market collapse being one of three things:
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Declining oil prices
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China’s markets falling
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A healthy correction (or the end of the world, depending on who you talk to).
Certainly these above items may have contributed to the market decline, but they were not the catalyst. The last Fed meeting did it ā period. See the chart below where the inserted arrow points to said meeting. After reading the minutes of the meeting it was clear something was amiss. The Fed was either clueless, had to many chefs contributing to the stew, or they lost confidence in their ability to magically manipulate this economy with the precision of a Swiss watch maker. That is why we fell.
Prior to that meeting oil was falling, and the market held up. China was falling and the market held up. We had gone the a long time without a correction and with low rates and a steady stock market there was no reason for a correction.
TODAY
I think the Fed caught on that they were the cause of the last drop, not by action in raising rates, but appearing to have no ability to act. Face it, if this economy is as strong as they claim a 10 or 25 basis point increase in rates is not going to destroy our economy. A 25 basis point increase in rates adds $30 per month to the average mortgage.
I believe since last month it has occurred to the Fed that there is a greater risk to the market to not raise rates than there is in raising rates. All of this is predicated on their ability to quickly and clearly articulate that this initial rate hike is possibly a one time thing, and actually may reverse if they see the economy stagnate. They are, after all, data dependent right?
My guess is the opposite of everyone else. I think there is an 80% chance they raise rates a smidgeon. The market will fall for about 5 minutes and then reverse and close up. If they 20% chance they don’t raise rates comes true I suspect the opposite will happen. I think we will run up for a minute or two, stop and then fall.
OPTION TRADERS
I stated Monday that I think the VIX will be at 18% by the end of the week. We are close and it is only Wednesday. Be careful of next week, though. We start the debate on if the government is going to shut down. Mr. Obama already spoke to democrat leaders yesterday to not let the republicans make the shutdown about Planned Parenthood. What? What does one have to do with the big picture.
If anyone on the left learned to compromise with the people on the right, then none of this would occur.
We will be cleaning up anything needed prior to the Fed announcement and act accordingly.
POT is held each Wednesday night at 7:00pm eastern.
Contract the office at 1- 855 ā RWT ā 0008 for more details.
Too True To Be Funny
STAVANGER, Norway (AP) ā In a break with Nobel tradition, the former secretary of the Nobel Peace Prize committee says the 2009 award to President Barack Obama failed to live up to the panel’s expectations.
This is the first time in history that the prize was given to create an effect, instead of reward an accomplishment. Think about that. I am going to find a cure for cancer next year, do I get the prize now?
Whether you like Obama or not doesn’t matter. Fair is fair. Even his friends must be thinking, āReally?ā
Everyone knows the Nobel diminished the value of the award.
Einstein didn’t even get the prize for general or special relativity, something that has changed our world (for the better). He got it for a much smaller accomplishment for the ālaw of photoelectric effectā.
Give the prize to Trump. When he says he will build a wall, we know he will do it. You may not want it, like it, etc. but it will be there. And it will be the first time any government project since the Hoover Dam was on time and on budget.
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Attorney Stuff
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