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Daily Market Update – June 2, 2016 (7:00 AM) Tomorrow is the day that many have been waiting for. It seems that for about the past year or so, every upcoming Employment Situation Report is given the same label. Each one is referred to as the most important Employment Situation Report since the previous one. Every now and then there may be some truth to the hyperbole. My guess is that if tomorrow’s number comes in strong, investors will rally the market, maybe even approaching or exceeding the previous high on the S&P 500. That would be a real affirmation of the way the market has seemed to come to accept the prospect of a rate hike coming with the June 2016 FOMC meeting. After that, it’s anyone’s guess what happens when the FOMC finally does make a decision. Will it be a repeat of December? But what if the FOMC delays a decision even if the numbers are good or what if the numbers don’t seem to support an increase in just a couple of weeks? Then it’s really a guessing game. In that case, the market may simply go back to what it has done for most of 2016 and just follow oil, although the correlation has been getting weaker lately. Between now and the FOMC Statement there will be a number of Federal Reserve Governors speaking their minds, including the most important one of all, but they have all been sending such mixed messages that’s it’s really hard to know whether the various members of the Federal Reserve are truly expressing their opinions or just sending test balloons out. That’s what happens when the Federal reserve gets too concerned about stock markets and loses focus and maybe its ability to have an objective approach to analysis and action. For me, my analysis is that mere mortals can’t know what is even reasonable probability of occurring and my actions show how ambivalent and uncertain I am. The market, though, as measured by Volatility, seems very certain, as volatility is so very low. That usually means the market is heading for a surprise. Just like after December’s decision, maybe. I’m just about this week’s ex-dividend positions and perhaps an opportunity to get either assignments or rollovers of both positions expiring this week. Two positions is still a paltry number, but anything in play is either a means for more income production or more for building up cash reserves, so I’m hoping some rational thought holds up until this week comes to its end. |
