People often compare the price of a stock relative to its earnings. Today, we think it makes more sense to compare stocks to the amount of money outstanding that can purchase it- i.e., we don’t think there’s a bubble (yet)!
Is the US stock market in a bubble?
US CPI Update
US CPI once again came in at 1.4%, far from market expectations of a booming inflation environment. In fact, median CPI was actually negative!
FOMC
The FED left rates unchanged at today’s FOMC meeting, followed by Chairman Powell’s press conference with some dovish tone saying “case for rate hike has weakened, incoming data has showed more slowing in global growth”.
DJIA up over 500 points at one stage led by Apple which rallied 7%, USD heading south with lower Treasury yield across the curve.
FOMC Minutes
Minutes of Dec 18-19 FOMC came out with some dovish tone;
- FED can afford to be patient about future rate hikes
- Officials felt timing and extent of future hikes less clear
- A few officials favored no hike at the meeting
- Fed should assess impact of risks that have become more pronounced in recent months
October 29 week
Busy First week of November with Bank of Japan MPC meeting on Monday, Bank of England on Thursday, and US NFP report on Friday.
Both BOJ and BOE are expected to keep policy unchanged, Friday’s NFP is expected to see a strong increase of 193k vs 1334k in previous month.
October 22 Week
Bank of Canada is meeting on Wednesday for a possible 25bp hike in its official interest rate from current 1.50% to 1.75%, while ECB is expected to keep policy unchanged on Thursday at the monetary policy meeting, press conference by ECB President Mario Draghi should be carefully monitored to see if there is a hint of first rate hike in Q2 or Q3 2019.
October 15 Week
Not much economic indicators out of the U.S. during the week of October 15, FOMC minutes will be out on Wednesday to see if there is any hint of another hike in December.
Otherwise, Global stock market behavior remains to be the focus after a turbulence started in the U.S. market spread worldwide this week.
October 8 Week
October 8 week schedule,
FXDD, FX market, Stock market are open on Monday October 8 Columbus Day.
Inflation data(Sep CPI) out of US on Thursday should be the main economic indicator of the week.
September 17 week
The Bank of Japan is expected to keep policy unchanged on Tuesday evening (NY time), as well as The Swiss National Bank on Thursday.
Otherwise a rather light schedule week with no major data out of the U.S.
