Fed decision. The Federal Reserve (Fed) wraps up its two-day meeting this afternoon and will announce its rate-hike decision at 2pm eastern. Market expectations for an increase are north of 70% but have fallen over the past week, along with equities, as oil continues to slide (details below) and geopolitical uncertainties persist. However, as LPL Chief Investment Strategist John Lynch noted yesterday on the LPL Research blog, “Although a complex economy often creates unknown challenges, we remain confident that the Fed’s current flexible approach may lower the likelihood of a policy mistake.”
Oil stabilizes after 7% tumble. WTI crude oil is near flat this morning after falling 7.2% yesterday to <$47/bbl amid a lack of clarity on the recent OPEC+ production cut agreement, a report from the EIA suggesting U.S. shale producers will likely continue to increase output, and a surprise build of 3.45M bbls (vs. expected 3.1M drawdown) in the API weekly inventory report. Despite expectations for a ramp-up in U.S. supply, it will be difficult for prices to remain in the $40 range since even the most productive regions in the U.S. will struggle to break even around current levels. We believe fair value is in the $60-70/bbl range, however, we don’t expect to return to those levels in the near term, and volatility is likely to persist as markets strive towards balancing supply and demand.
Will Santa come? December is off to a very rocky start, as after 10 trading days it was the worst start for the month of December for the S&P 500 Index since 1980. The good news is in 1980 the S&P 500 bounced more than 6% the remainder of the month, but will we see a Santa Claus rally this year? It is important to note that the majority of the equity strength in December takes place during the second half of the month. For more on late December seasonality, but sure to read today’s blog post available now.
- FOMC Meeting
- Existing Home Sales (Nov)
- UK PPI (Nov)
- UK CPI (Nov)
- Germany PPI (Nov)
- Japan Central Bank Meeting
- Initial Jobless Claims (Dec 15)
- Philadelphia Fed Index (Dec)
- Leading Indicators (Nov)
- UK Retail Sales (Nov)
- Bank Of England Meeting
- Japan Core CPI (Nov)
- Durable Goods Orders (Nov, prelim)
- Personal Income (Nov)
- Univ. Michigan Consumer Sentiment Survey
- Personal Consumption Expenditures
- GDP (Q3, final)
- Eurozone Consumer Confidence
- France GDP
- UK GDP
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