9/15/2016
By Charles Payne, CEO & Principal Analyst

The Fed hiking rates in September was always a long shot. It’s not because of politics, but because of the slow patch of data that includes disappointing retail sales and flat producer prices that saw food prices with their largest monthly decline since April 2013.

So, Yellen and Company won’t be the October Surprise. However, the Atlanta Fed is still modeling for the third quarter Gross Domestic Product (GDP) of 3.0%, down from their initial assumption of 3.6%, and this could be more than enough to put rates back into play to be a positive October Surprise.

Production Stalling

I am on record saying that this quarter will clock in at 3.5% growth, but if that is the case, it happens with a cautious consumer.  

That means businesses have to step up to the plate, which they haven't in a long time.

There should be major inventory builds and maybe an uptick in durable goods investments.

Another area of strength could be energy, where rigs are down significantly from their 2014 peak and have begun to rebound. 

In yesterday's production and capacity utilization report,one glaring bright point shows strong back-to-back monthly increases.

Oil and gas well drillings were off 45.9% year-to-year; monthly gains saw the following:

• +3.2% August         
• +4.9% in July

The bottom line right now is that the wheels of commerce are stuck in neutral.

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Charles Payne
Wall Street Strategies

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