Markets are searching for a catalyst to move in either direction. The Minutes from the recent FOMC meeting offered no new insight; the FOMC is in no rush to lower interest rates. The President floated tariffs on chips, cars, and drug imports. No major corporate announcements were made. There was little market reaction to a tentative Ukrainian peace proposal.
Uncertainty is rising. According to the NFIB (National Federation of Independent Business), its “uncertainty index” is at the highest level in history. The NFIB suggests this uncertainty is about the political environment…aka DOGE, inflation, interest rates, tariffs.
This uncertainty is also measured in the University of Michigan’s consumer sentiment survey, perhaps most significantly in their “inflation expectations” sub index. Recently it has been all over the place, depending upon the groups surveyed. Different groups have widely different views of the economy and inflation, and this difference matters regardless of who is right.
It affects business, investment, and consumer spending decisions in perhaps ways that we may not have seen before according to the NFIB.
What will happen today?
Last night the foreign markets were mixed. London was down 0.38%, Paris up 0.49% and Frankfurt up 0.39%. China was down 0.02%, Japan down 1.24% and Hang Seng down 1.60%.
Futures are down about 0.25% as WMT missed expectations. The 10-year is up 3/32 to yield 4.53%.
Kent Engelke
Chief Economic Strategist Managing Director
The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. This material is being provided for informational purposes only. Any information should not be deemed a recommendation to buy, hold or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. This report is not a complete description of the securities, markets, or developments referred to in this material and does not include all available data necessary for making an investment decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. If you would like to unsubscribe from this e-mail distribution, please reply to this e-mail and indicate that you wish to unsubscribe in your response.
