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Inflation Data Relatively Tame As Fed Sends Mixed Signals Thumbnail

Inflation Data Relatively Tame As Fed Sends Mixed Signals

By Scott Poore, AIF, AWMA, APMA
Chief Investment Officer, Eudaimonia Group


Another mixed week for markets after a Friday pullback.  Many thought the conflict in the Middle East would move markets last week, but that wasn’t the case.  Instead, markets, per usual, were affected by Fed speeches.  Early in the week, Fed members alluded to the likelihood of no rate hike for the remainder of the year and that they were not seeing signs of a recession ahead.  Equities moved higher as a result.  Later in the week, Some Fed members less confident that rate hikes were over and equities moved lower.  Inflation for September came in just slightly higher than expected, but relatively calm when measured on a year-over-year basis.  In fact, if you strip out energy costs, inflation was flat month-over-month. 

After the release of the inflationary data, futures on the Fed rate decision in November moved to 93% probability of no rate hike and 70% probability of no rate hike in December.  The top 7 stocks in the S&P 500 Index have risen more than 100% on average over the past 200 days, but the index itself is only higher by a little more than 14% year-to-date.  In fact, over the past two years, the S&P is up a little more than 1%, making it hard to believe that over a two-year period equities are barely above flat.  This week the blackout period for corporate buybacks ends and eyes will be on the forward guidance as a plethora of 3rd quarter earnings releases hit the market.  Last week, all five banks/financials—Wells Fargo, JP Morgan, Citigroup, PNC, and Blackrock –reported earnings above estimates.  We still can’t rule out news on the Middle East affecting markets.

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Disclosures

The information contained herein is for informational purposes only and is developed from sources believed to be providing accurate information. The opinions expressed are those of the author, are for general information, and should not be considered a solicitation for the purchase or sale of any security. The decision to review or consider the purchase or sell of any security should not be undertaken without consideration of your personal financial information, investment objectives and risk tolerance with your financial professional.

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