E-Mini S&P 500: A bull market in need of a catalyst?

The labor market has been strong thus perhaps allowing for two to three rate increased this year. The Fed did raise its benchmark lending rate a quarter point with further projections of two more rate hikes this year! Fed Chair Janet Yellen states that business investment has firmed and sentiment has increased. Policy is not on a preset course, so if inflation is overshot they can reconsider policy. Clearly the US Fed has an optimistic view of the US economy on the mend. Fed Chair Yellen said on Wednesday that the central bank could try to push inflation thru the 2 % target level. This Nonfarm Payrolls for February came in large at 235,000 new jobs created while the previous reading was 227,000 new jobs created. The Unemployment Rate was 4.7 % while the previous reading was at 4.8 %. The Private Payrolls was 227,000 while the previous reading was 237,000. The Average Hourly Earnings was 0.2 % while the previous reading was 0.1 %. The Average Workweek was 34.4 hours while the previous reading was 34.4 hours as well. The Participation Rate was 63.0 % while the previous reading was 62.9 %. The ADP Private Sector Employment Report for February came in at a whopping 298,000 while the previous reading was 246,000. The market is in a bullish mode unless it penetrates $2354.75. The range today for the (June) E-Mini S&P 500 was $2376.00 to $2365.50 an inside to lower day. Tuesday’s range could be an inside to lower or outside day around $2373.50 to $2363.50. Today’ Chicago Fed National Activity Index for February was 0.34 while the previous reading was -0.05.

The FOMC minutes from the last meeting took the same hawkish view of monetary policy as appropriate “fairly soon”! As of March 16th, the Q4 2016 S&P 500 companies 496 that reported 332 that beat expectations and 110 missed expectations while 54 met expectations and 249 of 491 beat the sales expectations. The VIX was 11.34 up +0.53 % as it normally trades inversely with the stock indexes. US Federal Reserve Bank of St. Louis President James Bullard stated that interest rates could remain “exceptionally low” for some time as he has not seen any inflationary pressure. We will probably see the exhilaration from Trumps expansion words to disappointment perhaps if the plans do not come to fruition in a reasonable time. The Real GDP for Q4p:16 was 1.9 % unchanged. The GDP Price Index was 2.0 % while the previous reading was 2.1 %.

Russia has cut production by 124,000 barrels per day. Projections of increased inventories have pinned oil prices for the near-term. The Iraqi Prime Minister has stated that in order to close the public deficit gap that they need $60.00 per barrel from their oil. OPEC reported January production to be off by 890,000 bpd. President Trump has brought a new concern in the energy markets. If the US produces a great deal of oil, how can OPEC freezes work to increase prices? The President is supposed to allow the new pipeline to pump more oil. The latest monthly report shows OPEC forecasts for 2017 non-OPEC production up only +120,000 bpd under the 300,000 growth pace of the prior forecast. Iraqi oil exports may have fallen during the first half of January. Exports shipped may be 3.25 bpd while in December they were around 3.51 bpd. Kuwaiti officials announced that the production levels have been reduced to about 2.707 million barrels a day according to OPEC guidelines. There are projections of the US becoming an energy exporter, but details have not been released. Saudi Arabia is said to have cut production by more than 0.49 million barrels per day! Iran’s National Oil Company has been approved for a loan of one billion Euros from Vitol companies.

President Trump has lofty ideas for the economy, but any thought that the plans may be detained or altered may create a further slump in the markets. President Donald Trump took office simply reiterating his campaign promises for expansion! We will buy American, hire American and make America great again. While the mantra is optimistic for the future of this country, the task may be daunting. President Trump has remarked on his vow to keep the currencies of Japan, China and the US on a level playing field. This type of sentiment is an affirmation to investors of a better economic environment thus propelling the indexes to higher ranges. The Chinese have been thought to devalue their currency to make their export trade more appealing for foreign buyers. China hiked their rates on Thursday. The European Central Bank and Britain left the door open to a potential monetary change.

US President Donald Trump has investors believing in his “make America great again” slogan. His fiscal stimulus ideas to expand the economy has increased the positive sentiment of traders. His spending ideas could increase potential inflation, but that would add to the banking sector. Also his impact on banking regulations may spur the lending institutions higher. The Fed had previously mentioned that they do not see a great improvement in the unemployment rate. They still forecast 4.5 % next year while January’s was 4.8 %. Yellen considers the current monetary policy as moderately accommodative. Fed Chair Janet Yellen is in Office until January 2018 and vows to stay her term until whereby the new administration may make changes or appoint a new chair.

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