Jackson Hole speech is central during the weekend




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Michael Nagle / Bloomberg

The market is on pins and needles this morning because investors are waiting for the Jackson Hole word, where Fed Chairman Jerome Powell is about to speak. Stocks rose slightly higher in trading before the stock market, but the speech may ultimately help to determine the path of Friday.

Bonds and gold were slightly higher than Powell's speech, while the dollar lost ground against the euro, but remained close to recent peaks. European and Asian stocks usually rose during the night. Trade negotiations in the US and China ended yesterday with no signs of major progress, according to media reports.

In addition, the new round of retail earnings broke out in early February, with Gap's shares falling into disarray after the company reported a drop in sales in the same store at Gap stores. However, sales in the same store also increased for other brands such as Old Navy and Banana Republic.

And Foot Locker's shares went up slightly as the company slightly outperformed Wall Street analysts' earnings and revenue forecasts. So it's kind of a mixed bag for the retailers this morning.

In the area of ​​data, durable goods were worse than expected in July and decreased by 1.7%. Wall Street analysts were looking for a 0.6% decrease. However, the core number, which decommissioned transport, was 0.2% higher, just slightly less than the expected 0.4%. It appears that volatility in the aviation sector is driving the primary number, but the market is likely to lower the report because at the end of the day this week's revenue has demonstrably confirmed the health of the consumer.

Fed front and center

By the time you read this, Fed Chairman Jerome Powell is probably talking in Jackson Hole. His focus could be on a number of issues, but anything he says about inflation or growth prospects is likely to receive the most attention from investors. Another Fed walk is actually traded on the futures market for the next month, so it seems unlikely that he would say anything that would change the mind about that.

However, consider listening to everything Powell could say about overseas markets, many of which are still struggling with slow economic growth and low rates. This could have an impact on how the Fed ultimately makes policy, as the US economy continues to grow much faster than many foreign ones. Another issue that could potentially be monitored is all that Powell says about US wage growth, which is still lagging behind with some measures, and whether he has any new insight into the narrowing US yield curve. The speech is called "Monetary policy in a changing economy" and starts at 10.00 ET.

An interesting perspective came from Marketwatch, who speculated that Powell could discuss Fed's policy options in the event of an economic downturn. This was a topic of discussion at the last meeting of the Federal Open Market Committee (FOMC).

Earlier Friday, financial news networks reported that St. Louis Fed President James Bullard, no voting member of the FOMC this year, said that if it were up to him, he would not raise interest rates in 2018. He warned that the economy might slow down and sees no need for the Fed to be preventive.

Note Appears still exalted amid political tension

In Washington D.C. political tensions have recently increased, and that could contribute to the cautious mood on Wall Street. Again, this is the so-called headline risk. Sometimes, when investors get scared of what might flash on their screens afterwards, they tend to reduce their exposure to more aggressive parts of the market. This is probably one of the reasons that US treasury certificates have performed so well lately, with 10-year interest rates falling at 2.82%, less than 3% earlier this month. This may be something that the market has been struggling with for a while, because historically this kind of political things tend to last for a while. The fact that the interest rate so far exceeded 2.8% seems to indicate that the fear has not become too advanced up to now.

The Cohe Volatility Index, the carefully viewed & # 39; fear index & # 39 ;, has just risen a little on Thursday but remained below 13. That is not an area that seems to warn many investors,

In another possible fallback against fear, the info-tech shares continue to shine, which is the only relatively light spot of the market on an otherwise rather lukewarm Thursday. The sector continued to perform worse than the broader market in the past month, partly as a result of the pressure of a disappointing profit news. However, it appears that some beaten shares attract investors' interest at lower levels. Software and semiconductor companies were among the winners on Thursday.

Overall, the last part of this week was not too exciting for the majority of the market, partly because of Washington's cautiousness and because investors were waiting for Powell. Nevertheless, the S & amp; P 500 index this month so far increased by about 1.4%, and the Nasdaq had a five-day winstreak that was interrupted on Thursday. The S & amp; P is not far from its highest point ever and sets a height this week during the day.

FIGURE 1: What is hot? In the past month, small cap stocks in the Russell 2000 have the S & amp; P 500 (blue line) surpassed because some investors seem to be going to small caps in the hope that they might be less exposed to possible rates. Nasdaq (purple line), with its focus on tech, can benefit from the same. Data source: S & amp; P Dow Jones Indices, Nasdaq, FTSE Russell. Graph source: The thinkorswim & reg; platform of TD Ameritrade. For illustrative purposes only. Past performance does not guarantee future results.Graph source: The thinkorswim & reg; platform of TD Ameritrade.

Dollar Outduels Pound Sterling: After weakening a little earlier in the week, the US dollar has begun to reverse it against other currencies, especially the British pound. Part of the strength of the dollar could partly come from the Fed minutes that were released on Wednesday and that did not seem to show much or any hesitation about a next rate hike next month. Investors can also embrace the dollar amid concerns about US / Chinese trade negotiations and how they can turn out, analysts said. In this case, the dollar could be seen as a possible defensive investment in the event that jitters in the trade are getting worse.

The pound sterling also has some of its own factors, in particular concerns about the next steps with the Brexit. It is keenly going against the dollar in the last six months. The slow pace of negotiations between Britain and the rest of the European Union raises the fear that Great Britain would leave the E.U. in March, without a transitional agreement to keep it temporarily in the internal market and the customs union, the media noted. That is something to look out for in the longer term, because it may be another factor that plays in dollar strength. A strong dollar can sometimes weigh on American multinationals.

More Retail walking opportunities: We have already talked a lot about the long term of healthy retail income this week, but there is one more thought. What we have seen in the retail trade differs a bit from other sectors, in particular technology, because a rising tide lifts up almost every boat in the retail trade. Info technology is different, because the upgrade of an analyst by a company almost always comes at the expense of someone else. Advanced Micro Devices recently received an upgrade from a known analyst, but this was at the expense of Intel. It is very much black and white.

It is different in retail. People have more money in their pockets and seem to shop at more stores. They can buy at Lowe's, but also at Target. There is more foot traffic to many of these stores and there is more web traffic. This is the kind of thing that sometimes happens in a growing economy. That could help explain why consumer goods have been one of the fastest growing equity sectors in the last three months and why consumer goods in that period also broadened the S & amp; Beat P 500 index.

Do you want to buy a new house? If, you are probably one of a smaller number of buyers, reports the new houses of July Thursday. The data showed a turnover of 627,000 adjusted for seasonal effects, compared to the 645,000 that Wall Street analysts had projected and down from 638,000 the previous month. It was the second consecutive month with declining figures. It was also the second bit of bearish housing data this week, because the existing home sales also fell on a month-over-month and year-on-year basis. Supply and price pressure seemed to stifle existing home sales, while house sales were down, while the average sales price increased by 5.9% to $ 394,300. Stocks also increased.

Housing data has been stalling lately and remain a key factor to consider. Sometimes, but certainly not always, housing weakness can point to broader problems in the economy. The impressive retail revenue season that is closing, however, suggests that consumers may be pretty healthy, but may not always be able to buy a new home. The report on sustainable goods today is the latest to get a good picture of the consumer's condition.

TD Ameritrade & reg; commentary only for educational purposes. SIPC member.

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The market is on pins and needles this morning because investors are waiting for the Jackson Hole word, where Fed Chairman Jerome Powell is about to speak. Stocks rose slightly higher in trading before the stock market, but the speech may ultimately help to determine the path of Friday.

Bonds and gold were slightly higher than Powell's speech, while the dollar lost ground against the euro, but remained close to recent peaks. European and Asian stocks usually rose during the night. Trade negotiations in the US and China ended yesterday with no signs of major progress, according to media reports.

In addition, the new round of retail earnings broke out in early February, with Gap's shares falling into disarray after the company reported a drop in sales in the same store at Gap stores. However, sales in the same store also increased for other brands such as Old Navy and Banana Republic.

And Foot Locker's shares went up slightly as the company slightly outperformed Wall Street analysts' earnings and revenue forecasts. So it's kind of a mixed bag for the retailers this morning.

In the area of ​​data, durable goods were worse than expected in July and decreased by 1.7%. Wall Street analysts were looking for a 0.6% decrease. However, the core number, which decommissioned transport, was 0.2% higher, just slightly less than the expected 0.4%. It appears that volatility in the aviation sector is driving the primary number, but the market is likely to lower the report because at the end of the day this week's revenue has demonstrably confirmed the health of the consumer.

Fed front and center

By the time you read this, Fed Chairman Jerome Powell is probably talking in Jackson Hole. His focus could be on a number of issues, but anything he says about inflation or growth prospects is likely to receive the most attention from investors. Another Fed walk is actually traded on the futures market for the next month, so it seems unlikely that he would say anything that would change the mind about that.

However, consider listening to everything Powell could say about overseas markets, many of which are still struggling with slow economic growth and low rates. This could have an impact on how the Fed ultimately makes policy, as the US economy continues to grow much faster than many foreign ones. Another issue that could potentially be monitored is all that Powell says about US wage growth, which is still lagging behind with some measures, and whether he has any new insight into the narrowing US yield curve. The speech is called "Monetary policy in a changing economy" and starts at 10.00 ET.

An interesting perspective came from Marketwatch, who speculated that Powell could discuss Fed's policy options in the event of an economic downturn. This was a topic of discussion at the last meeting of the Federal Open Market Committee (FOMC).

Earlier Friday, financial news networks reported that St. Louis Fed President James Bullard, no voting member of the FOMC this year, said that if it were up to him, he would not raise interest rates in 2018. He warned that the economy might slow down and sees no need for the Fed to be preventive.

Note Appears still exalted amid political tension

In Washington D.C. political tensions have recently increased, and that could contribute to the cautious mood on Wall Street. Again, this is the so-called headline risk. Sometimes, when investors get scared of what might flash on their screens afterwards, they tend to reduce their exposure to more aggressive parts of the market. This is probably one of the reasons that US treasury certificates have performed so well lately, with 10-year interest rates falling at 2.82%, less than 3% earlier this month. This may be something that the market has been struggling with for a while, because historically this kind of political things tend to last for a while. The fact that the interest rate so far exceeded 2.8% seems to indicate that the fear has not become too advanced up to now.

The Cohe Volatility Index, the carefully viewed & # 39; fear index & # 39 ;, has just risen a little on Thursday but remained below 13. That is not an area that seems to warn many investors,

In another possible fallback against fear, the info-tech shares continue to shine, which is the only relatively light spot of the market on an otherwise rather lukewarm Thursday. The sector continued to perform worse than the broader market in the past month, partly as a result of the pressure of a disappointing profit news. However, it appears that some beaten shares attract investors' interest at lower levels. Software and semiconductor companies were among the winners on Thursday.

Overall, the last part of this week was not too exciting for the majority of the market, partly because of Washington's cautiousness and because investors were waiting for Powell. Nevertheless, the S & P 500 index has so far increased by about 1.4% and the Nasdaq had a five-day winstreak that was interrupted on Thursday. The S & P is not far from its highest point ever, and has set an intraday high this week.

FIGURE 1: What is hot? Over the past month, small-cap stocks in the Russell 2000 have surpassed the S & P 500 (blue line), as some investors seem to be going to small caps in the hope that they might be less exposed to possible rates. Nasdaq (purple line), with its focus on tech, can benefit from the same. Data source: S & P Dow Jones Indices, Nasdaq, FTSE Russell. Map source: the thinkorswim® platform from TD Ameritrade. For illustrative purposes only. Past performance does not guarantee future results.Map source: the thinkorswim® platform from TD Ameritrade.

Dollar Outduels Pound Sterling: After weakening a little earlier in the week, the US dollar has begun to reverse it against other currencies, especially the British pound. Part of the strength of the dollar could partly come from the Fed minutes that were released on Wednesday and that did not seem to show much or any hesitation about a next rate hike next month. Investors can also embrace the dollar amid concerns about US / Chinese trade negotiations and how they can turn out, analysts said. In this case, the dollar could be seen as a possible defensive investment in the event that jitters in the trade are getting worse.

The pound sterling also has some of its own factors, in particular concerns about the next steps with the Brexit. It is keenly going against the dollar in the last six months. The slow pace of negotiations between Britain and the rest of the European Union raises the fear that Great Britain would leave the E.U. in March, without a transitional agreement to keep it temporarily in the internal market and the customs union, the media noted. That is something to look out for in the longer term, because it may be another factor that plays in dollar strength. A strong dollar can sometimes weigh on American multinationals.

More Retail walking opportunities: We have already talked a lot about the long term of healthy retail income this week, but there is one more thought. What we have seen in the retail trade differs a bit from other sectors, in particular technology, because a rising tide lifts up almost every boat in the retail trade. Info technology is different, because the upgrade of an analyst by a company almost always comes at the expense of someone else. Advanced Micro Devices recently received an upgrade from a known analyst, but this was at the expense of Intel. It is very much black and white.

It is different in retail. People have more money in their pockets and seem to shop at more stores. They can buy at Lowe's, but also at Target. There is more foot traffic to many of these stores and there is more web traffic. This is the kind of thing that sometimes happens in a growing economy. That could help explain why consumer goods have been one of the fastest growing equity sectors in the last three months, and why consumer goods in that period also beat the broader S & P 500 index.

Do you want to buy a new house? If, you are probably one of a smaller number of buyers, reports the new houses of July Thursday. The data showed a turnover of 627,000 adjusted for seasonal effects, compared to the 645,000 that Wall Street analysts had projected and down from 638,000 the previous month. It was the second consecutive month with declining figures. It was also the second bit of bearish housing data this week, because the existing home sales also fell on a month-over-month and year-on-year basis. Supply and price pressure seemed to stifle existing home sales, while house sales were down, while the average sales price increased by 5.9% to $ 394,300. Stocks also increased.

Housing data has been stalling lately and remain a key factor to consider. Sometimes, but certainly not always, housing weakness can point to broader problems in the economy. The impressive retail revenue season that is closing, however, suggests that consumers may be pretty healthy, but may not always be able to buy a new home. The report on sustainable goods today is the latest to get a good picture of the consumer's condition.

TD Ameritrade® commentary for educational purposes. SIPC member.


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