Daily Market Update – March 16, 2015 (8:15 AM)
Last week was another one wasted in worries over interest rates.
This week the worries may come to an end as the FOMC Statement is released on Wednesday and we’ll learn whether the word “patience” will continue to be used in offering some kind of a timeframe for the start of interest rate increases.
While everything was upended with the most recent Employment Situation Report, I still have to think that the recent words of Janet Yellen may carry more weight that the data from a single month of collection, particularly as that data is frequently adjusted in subsequent months,
While the stock market was getting bogged down with concerns about interest rate increases, which history has shown actually sends markets higher during the early stages of increase, the bond market was actually sending rates lower.
That has to add to some of the confusion as you would have to wonder on what basis they could believe that was the appropriate direction.
Very possibly, however, that’s the right decision regardless of what the FOMC does, as whether “patience” remains or not, it should provide either some comfort or clarity.
The real question may be what, if anything, further Janet Yellen may say during her press conference following the release of the FOMC Statement..
This morning, to start the week the pre-open futures are pointing moderately higher, but if the past two weeks have shown anything at all, it’s that these kind of pre-opening moves, whether mildly or moderately higher and in either direction, have no predictive value for the rest of the trading day.
There’s been lots of volatility over the past couple of weeks and some of the trading has opened bearing no resemblance at all to what preceded it in the pre-opening trades.
With a little bit of money spared up from assignments last week there’s some opportunity to add some new positions. However, with a number of positions set to expire this week as the monthly contract comes to an end, the concern is that the last 2 weeks have moved them further and further from assignment or rollover.
Ordinarily I wouldn‘t want to add more expiring positions to an already lengthy list, but insofar as there’s a need to try and re-generate funds through assignments for subsequent weeks, there may be reason to go against initial instincts.
Other than this week’s FOMC Statement, there isn’t very much else expected to be able to rock markets, but energy and interest rates still remain volatile, as so precious metals and currencies. Any of those, especially if facing another strong leg downward could put trickle down pressure on stocks, as well.
For a number of months in the recent past the Tuesday before the FOMC Statement release had been unexpectedly positive, as usually the market had been reserved in anticipation of the unknown, but had for a time become optimistic that the dovish position would prevail.
For the past two months that reservation has returned, so I expect the week to be fairly sedate until Wednesday, as right now there’s neither reason to be optimistic nor pessimistic about the dove’s ability to withstand pressure.
I expect to be watchful this morning and as always, hopeful, that there comes some opportunity to make sales of calls on uncovered positions, even though those have been scant of late.
However, all it may take is a pleasant surprise from the FOMC giving the green light to party on.