9/14/2015
By Charles Payne, CEO & Principal Analyst

This week is all about the Federal Reserve…the moment of truth.

It feels like all we talk about is the Fed and China these days (it could be worse; it used to be those two and Greece), and this week will be no different.  The Federal Reserve Open Market Committee (FOMC) gathering begins on Wednesday with the decision and press release on Thursday.  In my mind, there is no way the Fed could raise rates based on its own stated goals and admitted worries.  Nonetheless, only recently have the experts collectively changed their minds about a rate hike this week.

Essentially for me, I’ve always thought the first rate hike would be a declaration that the economy is doing great.  Apparently, it’s a political message of independence.

However, there’s something to be said about being locked in ivy towers with the sole job of crunching numbers.  For the rest of the country, things aren’t so obviously great.  In fact, if the Fed is counting on Main Street to break out into some kind of universal enthusiasm, they have seriously miscalculated. 

Shoulders Slumping

Consumer confidence as measured by the University of Michigan slipped up big time with sentiment about the economic six months from now, dropping to a 2015 low point.  A big reason for this is that the stock market has been on a wild ride.  I suspect it’s the ride more than the correction that’s rattled most folks. 

There have been no safe havens in the stock market over the past three months, meaning everyone’s portfolio has given up ground.  The flip side of this drama is that the growing pessimism about the stock market can be a good thing.  Still, cause and effect have a funny relationship.  Cheaper gas and a strong dollar should have played a larger role; however, it might have been offset by the psychology of mediocrity; mediocrity knows nothing higher than itself.

Parameters

The Dow Jones Industrial Average is nearing the point at the pennant where it makes a sharp move- could be higher or lower.  The big upside breakout comes with a close above 16,650; on the downside, the inability to hold 16,050 could spring a trapdoor.

Click here to make a comment.

Charles Payne
Wall Street Strategies

Add a Comment!