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Daily Market Update – May 24, 2016 (Close) For the next few weeks we are likely to hear more and more about how the data coming in will or won’t support FOMC action to raise interest rates. The torrent began last week and has continued through this past weekend and the beginning of this trading week. However, that torrent hasn’t been on the back of any data, but more on the backs of the utterances of various Federal Reserve Governors. Whether they are getting everyone prepared for a June 2016 increase or simply giving traders enough time to digest the news so that there won’t be any great upheaval in markets for either a June or a July increase is subject to speculation. But there’s probably no sense in denying that the Federal Reserve members think about a lot more things than they ever used to, include foreign markets and the US stock market. Purists will say that the focus of the Federal reserve should be purely upon their mandates and not get blurred by other factors, but the reality is that everything matters, including politics and public opinion. It does seem that the FOMC is playing more and more of a game while taking temperatures of various constituencies and stakeholders. Yesterday the market was faced with declining oil and the increasing likelihood that interest rates were going to increase, perhaps as early as next month. To its credit, the market did well to end the day absolutely flat, especially when you realize that it was never really in the hole. This morning the futures were pointing a little bit higher as a few more consumer related earnings reports come in for the week. The big ticket item, though, will come on Friday as the GDP is released, but it may not end up being as important as today’s New Home Sales. That report hasn’t been all that important lately, but it really came in strongly today, especially at the higher end of the market. That sent the market soaring, just like it used to in the old days. After the close some more decent technology earnings may help the market tomorrow, After that everyone will be waiting for the GDP and its revisions to see whether the FOMC really has anything to support all of the newly found hawkish tone. Today’s New Hosing data does support the idea, though. I had been expecting that this was going to be a very quiet week for me, although I still wasn’t opposed to spending down some of my limited cash. And so I did in the hunt for a dividend and then rolled the position over to either get more premium in exchange for the dividend or more premium and the dividend. We’ll see how that works out tomorrow morning, but I’d be happy for an early assignment, although I don’t think it too likely. With next week being a holiday shortened trading week and only a single position set to expire, I still wouldn’t mind adding something and perhaps using the June 3rd expiration date to get some additional premium for the effort. Otherwise, it may just be a case of sitting and listening and trying to figure out how the market will interpret any kind of news. I think it’s time to take news on its face value and to stop playing the various games. Both FOMC members and traders need to grow up. |
