The good news (if there is some) is the futures market is indicating a higher open this week. That may or may not mean much by the end of the week. But for now, I guess it’s better than opening up to more red.
The word on the street is out. This week’s jobs report is the key. If it comes in too hot, it means the Fed continues to push rates higher and the economy probably gets wrecked. If it shows signs of rising unemployment, maybe we can back off on the pessimism.
Crazy, right? Bad news would be good news? Well, that’s the world we’re in right now.
The web is complicated. Higher rates are leading to a higher US dollar. This, presumably, is because other global currencies are in worse shape, so overseas investors flock to the higher yielding dollar now. This drives the dollar higher (increased demand) and foreign currency lower (reduced demand). The problem is, it’s creating knock-on effects for other economies as their currencies weaken… like, inflation (since most commodities are priced in dollars, which are now stronger).
Of course, inflation creates other problems. So central banks have to intervene or risk other systemic problems (like banking problems).
I’ll take a moment and break from the implied-first-person narrative and just throw my personal opinion in the mix… I wonders if this isn’t an unintended consequence of political overreach by globalists seeking to create a more coordinated central banking policy. Certainly, there have been conspiracy theories about the World Economic Forum, Blackrock, Vanguard, and others that are seeking to own and control the world. And I’m avoiding some of the other more nefarious conspiracy hear. But consider the motivation to perhaps be less about total population control than it is to create a unified global financial system that avoids these kinds of major dislocations (where different currencies blow up and others strengthen). The law of unintended consequences would suggest the very thing that was supposed to be avoided would be the thing that happens.
But I digress… what does this mean for investors… right now?
The short answer, we don’t know. But the set-up for this week looks like we could see a pop in prices. Don’t get your hopes too high though. There is plenty of talk, plus plenty of data, that suggests the price rally could be a false move higher. Some of this has to do with technical things in the market. Some has to do with news cycles — including the upcoming election in less than a month now. And some of it can simply be an opportunity for pessimists to get out.
Whatever the case, the short-term looks mixed, but may include a little bounce for a couple days. We’ll watch closely. Here’s the chart of the week to watch – if we go higher, look for 3700 to get tested by the SPX. If not, we could be re-tracing our way to 3393… or lower (bummer, but I just report this stuff, I can’t control it).
Looking for a possible early move higher this week. Most eyes are on the jobs report this Friday
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