Last week the market ended with a bullish bias. The S&P 500 and the Dow Jones Industrial Average both set new record highs on very steady volume. I did not see the tail tell signs of panic buying. The VIX closed at 11.68 down 3.34% on Friday. With the FOMC decision rate should be raised on Sept 26 to 2.125%. The VIX could be at a bottom and might advance as the decision point draws near. The question that people are asking now is if the FOMC will raise again in December or is that it for the year.
An Economics professor of mine taught that when the GDP is growing the Stock Market should follow all things being equal. (meaning not external stimulus) Now that the quantitative tightening is in effect, the market looks like it is getting back to a normal routine. According to briefing.com, Real GDP growth was a modest 2.2% ion the first quarter, and it accelerated to 4.2% in the second quarter. The Atlanta Fed’s GDPNow model estimate for real GDP growth in the third quarter is 4.4%. The economic backdrop today is suited for strong stock growth and modest inflation.
Lets look at the rest of the world.
Global Spotlight
NAFTA “Deadline” Approaching. If the United States wants a new North American Free Trade Agreement before Mexico’s new leftist president, Andres Manuel Lopez Obrador, takes office Dec. 1, it will need a breakthrough with Canada by Sept. 30.
More Tariffs Batter China. As we were anticipating, the White House is moving ahead with another barrage of tariffs on China, slated to go into effect Sept. 24.
Will the U.S. Entertain WTO Reform? The European Union and Japanese trade ministers will try to find common ground with U.S. Trade Representative Robert Lighthizer this week when they present a proposal on WTO reform.
Maximum Pressure Time for Iran. The Trump administration will be using the U.N. General Assembly spotlight next week to broadcast the next steps in its pressure campaign against Iran.
A Very Fragile Deal in Idlib. Turkey has managed to stave off an offensive in Idlib for now through a deal with Moscow to set up a demilitarized zone, but a lot can still go wrong.
Can Moon Break the North Korean Stalemate? Coming off another rosy inter-Korean summit, South Korean President Moon Jae In will deliver a message from North Korean leader Kim Jong Un to Trump when he attends the U.N. General Assembly next week in New York.
Russia’s Messy Election Aftermath. Following a controversial run-off vote in Primorsky Krai on Sept. 16, Russia is holding three more run-off gubernatorial elections in the regions of Vladimir, Khakassia and Khabarovsk on Sept. 23.
No Brexit Breakthrough, Yet. British Prime Minister Theresa May is supposed to present new proposals on keeping the border with Northern Ireland open after hitting another impasse with Brussels.
stratfor.com
Economic Calendar
Here is a list of the U.S. economic events happening this week.
Briefing.com
Review Last weeks numbers here.
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