Rattled investors brace for big week as Federal Reserve considers rate increase

The Guardian ^ | Sunday 30 August 2015 | Rupert Neate

[expat_panama]

After a tumultuous week on the world’s stock markets, investors will be focused on Wall Street Monday ahead of another set of economic reports likely to steer the Federal Reserve’s decision on whether to raise interest rates for the first time in almost a decade.

The markets open Monday as investors digest news that the Fed is still actively considering a September rate hike. In a speech on Saturday, Stanley Fischer, the vice-chair of the Fed’s Board of Governors, suggested inflationary pressures could soon lead to an increase.

His comments are likely to add to the volatility of already skittish markets. Hundreds of billions of dollars were wiped out and, mostly, gained back on stock markets across the world last week as traders and investors panicked about a possible slowdown in the Chinese economy, the world’s second-largest.

In New York, the Dow Jones industrial average index lost 1,000 points last Monday – a day dubbed Black Monday by Xinhua, China’s official news agency.

On Friday, the Dow closed down marginally for the day but up 1.1% for the week after rallying for two days on comments from Bill Dudley, the president of the New York Federal Reserve and the second-most important US central banker after Janet Yellen. In an interview, Dudley said it was unlikely that interest rates will rise in September, as had been widely expected for some months.

The indication that a rate rise would be delayed helped to calm investors unnerved by the prospect of an imminent tightening in credit costs in the world’s largest economy. The prospect of a rate increase by the Fed has also alarmed global stock markets, because it could draw investment funds out of emerging markets and back to the US.

Global central bankers this weekend debated what effect the past...

[expat_panama]

Yipes!  So even if our rally can still survive it still looks like we're at the least looking to more volatility --this is the future's eye view 2-1/2 hrs before opening (click here for update):

Only major report today is Chicago PMI but we got neat FR thresds:

• Hundreds arrested as Beijing launches stock market crackdown
• Law of Unintended Consequences: New EU Tax Laws Force Thousands of Businesses to Close
• It looks like China is through propping up its stock market
• GE rules out relocation to Dallas because of Texas politicians’ views, report says
• The US Economy: Things are good and slowly getting better
• How farmers from rural China bet on the stock market and lost

and news:

Market Correction Explained In 5 Questions - Charles Passy, MarketWatch
Rising Anxiety That Stocks Are Overpriced - Robert Shiller, New York Times
Correction Makes Sept. Rate Hike Compelling - Rex Nutting, MarketWatch
It's Time to Reform Fed That's Lacking a Clue - John Fund, National Review
Economic Progress More Effective Than Protests - Joel Kotkin, Daily Beast
Hey Sen. Warren, Crony Socialism Is the Problem - Ralph Benko, Forbes

[mad_as_he$$]

My charts are all wacky. I am sitting this week out. Holding some CVX and COP I scooped for cheap last week.

Real news story for “investors”:

http://www.cnbc.com/2015/08/24/investors-report-problems-with-td-ameritrade-scottrade-amid-selloff.html

Remember most of Wall Street actually believes econ numbers published by the government.

[expat_panama]

Given the fact that most career folks in the capital markets succeed, (if they didn't they wouldn't be "career" folks), their understanding either is spot on or it's irrelevant.  What I'm seeing is that there's a lot more going over time w/ stock prices than just announcements.  Announcements do in fact stir things up tho, but (again mho) the affect is mostly just white noise static.

[mad_as_he$$]

Yup. If they make through the first year of the meat grinder then they have a shot. It still is a steep pyramid. I suspect all the attention given announcements is mostly a distraction to generate trades.

[expat_panama]

CVX and COP I scooped for cheap last week.

Last week appeared decisively upbeat and now that's all in question.  Well, that's why instead of full-in/full-out we take measured steps.

[PGalt]

Thanks for the ping and your work. I’m not in “anything” currently (depreciating FRNs) but these are fascinating times to watch all markets. Good luck to all.

[citizen]

FBC guy said Chicago PMI came in “less than expected” for what it’s worth.

[SaraJohnson]

So while China devalues their currency, the US is about to raise interest rates here.

[expat_panama]

the US is about to raise interest rates

Some how the only explanation I can see is that there are people at the Fed who've decided that the recovery's picking up speed and we desperately need a hike and there's no time to waste on less important stuff like facts and reality.

[expat_panama]

Thanks and it's true, ya can't buy entertainment like this. Come to think of it tho this can be costly sometimes...