First Market Update of 2017

 

Hello Folks

I wanted to let 2017 market behavior “shape up” before my first post of the year, we have now reached that point as I type this in the late evening hours of Jan-12.  Bottom Line Up Front (shout out to A.V.T.) – I remain 100% S-Fund.   The markets have traded for approximately two weeks now…. as I discuss recent market behavior and other events, keep in mind the theory known as the “January Barometer” – an indicator which asserts that January sets the tone for the rest of the year.  Like such topics as Extraterrestrial life, global warming, fracking, and other interesting things, this theory is not without naysayers and critics.  However, me, I am a believer in this indicator.

Soon after the first trading day of the year (Jan-2), the SP 500, my benchmark market-health index, made an All-Time-High on Jan-6, reaching 2282.10.   Also, some market confirmation behavior has been underway, confirming my belief that the stock markets are beginning a new Bull Phase (commenced in November):  this behavior being the increase in the stock indexes, and a decrease in the price of Gold.  Gold is typically the worldwide safe haven investment, our G-Fund and the dollar bills in our pockets are ultimately backed by Gold.   As such, Gold in almost all cases will rise when threats are perceived to exist to stock market investments, and the reverse will happen when the majority feel that stocks are a safe place for their money.  Gold indeed has risen since Jan-2, while the stock markets have remained mostly flat, versus gone down.   So the recent rise in Gold is not worrisome yet.   Lets take a look at some charts:

 

Evident above, is the “confirmation” Phenomenon.   Furthermore, oft discussed here, is the fact that crude oil actually climbs in bull stock markets.  Contrary to conventional wisdom, higher crude oil prices (to a point, we are not talking $300 a barrel…) reflect a well-functioning economy.  My own research reflects that $55-$65 a barrel is the “ideal” price, one that will not kill the retail consumer at the fuel pump, and will still allow profits to the big oil companies who employ thousands of employees worldwide.   Lets take a look at the Crude Oil chart:

So, from a technical analysis view, all the indicators and signals are reflecting that a bull market is underway.  An interesting observation: historically, small caps always outperform everything else, in a new bull market.  That is happening now, at least in regards to United States stocks.   The S-Fund, and other small cap indexes, are outperforming.   So throw all my charts into the garbage and you have additional indicators that reflect a bull market is in the works.  Note that very recently the I-Fund has started to performed very well, however I am still a little skittish about international stocks.   I may change my mind in the next 30-90 days though.

A negative observation along with all of this, one that I cannot overlook, especially since volume action is very important to me, is the fact that volume has been running at average, or below average, on the SP 500 index, since Jan-2.  Why, I do not know (I can only read the charts…) but it is possible that market participants are waiting for the 2017 Presidential Inauguration (Jan-20) prior to additional investment.  I anticipate a renewal of the uptrend after Jan-20.  I saw “renewal” because the markets have been mostly flat so far, bound by an SP 500 support level of 2250, and overhead resistance of 2280:

On the above chart, I deleted an outlier-day, Dec-30, which had some weird odd behavior, hitting a low of 2233.62 that day.  One day does not determine the market’s health, with Dec-30 being a Friday, and the last trading day of 2016, possibly the traders on Wall Street (very few of them— that day was low volume) were getting a little carried away with their Jim Cramer sell-sell-sell buttons.  I removed that day from my analysis, and consider 2250/2280 to be important levels to watch.  With the exception of big box retail and mall-based stores, the US economy appears to be doing fine.   With Mr. Trump’s expected tax cuts, regulation reduction, and focus on US jobs, the economy should continue to improve into 2017.

On that note, I will sign off.   I remain 100% S-fund, however depending on how the next 30-90 days go, I may consider modifying my allocations.

Until then, thank you for reading and talk to you soon…

-Bill Pritchard

 

 

 

 

Merry Christmas and Happy New Year message to All

 

Good Morning Folks

As we approach December 25, I wanted to say Merry Christmas and Happy New Year to the audience.  Thank you for making The Fed Trader website a success, your feedback and input over the years has been appreciated.  A number of subscribers have reported crossing the $1M threshold in their TSP accounts, congratulations to them as they celebrate some added joy during the holidays.

As many of us celebrate Christmas home with our families, let’s keep in our thoughts and prayers the law enforcement, public safety, first responders, and military professionals who may be working during the holidays, keeping the rest of us safe.

Merry Christmas !

-Bill Pritchard

 

Market Rally Continues

 

Hello Everybody

Reporting from near Flower Mound, Texas, where I attempted to do my regular evening walk, only to return inside and send out a market update in lieu of freezing to death on a sidewalk in suburbia.   The dispatch call would be “Frozen man with dorky reflector vest found in front yard of residence…”

The market rally has continued, with new All-Time-Highs (ATH) being attained by the indexes.  The markets went upward from Nov-8 until Nov-22, then went flat until Dec-7, at which point we witnessed a huge surge upward on the SP-500 Index, on above average volume.   The previously discussed 2200 overhead resistance level was breached on Nov-22, one day after my decision to re-enter TSP stock funds.

Let’s look at some charts:

The dreaded FOMC interest rate hike did not hurt the markets, the Dow Jones closed down 118 points on Dec-14, generating some alarm in my subscriber base that the markets would continue lower.   They did not go lower, and remained stable.  Why I am optimistic about things so far:

Mr. Donald Trump (DT) is assembling (in my opinion) a very impressive team, especially from a business perspective.  Make no doubt that he considers “energy” as critical to job creation, and as a key component for economic and political vitality.   Energy stocks will benefit from this Administration, in my opinion.   He has appointed Texas Governor Rick Perry as head of the Department of Energy.  Texas contains the HQ for Exxon, ConocoPhillips, Valero, and a variety of other smaller oil and gas companies.  Factoid:  Texas, a pro-business state,  contains more Fortune 500 companies than any state, except New York.   It is safe to say that Rick Perry understands business and energy.

If any agency exists that could negatively impact the energy industry, it would be the EPA.  To head the EPA, DT is bringing in Oklahoma Attorney General Scott Pruitt, who has expressed frustration with prior EPA policies and positions.  Another factoid is that Oklahoma occupies an important role in the energy sector, and is a state in which over 25% of its residents work in the energy sector.

DT has brought in Exxon CEO Rex Tillerson to be head of the Department of State.  In today’s times where we must rely on others to have success with global security and economic goals, bringing onto the team someone who already has strong relationships with other countries is a smart move.  He also ran a company whose economic success is dependent on positive relationships with OPEC countries.   Rex Tillerson also happens to live near me, (yes, his house is much bigger)…I am happy to see a fellow neighbor occupy such an important post.

DT has selected Steve Mnuchin to head the Treasury Department.  Mnuchin, a millionaire, and former Goldman Sachs senior partner, knows a thing or two about business and hopefully will bring that to his new role.

It is my opinion that DT is building a good team, and the markets will embrace this.   De-Regulation, new business stimulus, and improved relations with other superpowers are not a bad thing, (contrary to belief), and I am very optimistic at this point.

As indicated by the below SP 500 charts, we have been in mostly accumulation mode in December:

While we may see some “pull back” in the coming months, I believe the overall market trend will continue upward.   The best performing TSP Funds will be a toss up between the S-Fund and C-Fund, with the S-Fund likely outperforming.  If we see Russia really assist us with situations in Syria, Afghanistan, and other hot-spots, this will breed further optimism in international markets and this can only be positive for things to come.

In sum, I remain 100% S-Fund until further notice.   FYI that the next two weeks will see reduced trading volumes in the markets, with many participants out on vacation.  Any up or down moves are to be viewed thru the lens of caution, it is best to wait for volumes to return to normal for an accurate analysis to occur.

The exchanges are closed on Monday Dec-26 and Monday Jan-2.

Thank you for reading and talk to you soon…

-Bill Pritchard

 

 

 

 

All Indexes close at All Time Highs

Good Evening

I am leaving G-Fund and will be 100% S-Fund until further advised.  All market indexes closed at All Time Highs, with the SP 500 closing at 2198.18, above the previously discussed 2190 level.  Volume, while not above average, was sufficient enough, in my opinion, in light of the holiday week, to return to stocks.    The best performing stocks are Small-Cap stocks, aka S-Fund.  Observation:  In a new bull market, small caps always perform best.  Then towards the end of a bull market, large cap stocks outperform.  So some theory exists that we may be seeing a new bull market phase underway, in the beginning stages.

In looking at multiple other indicators, I have nothing to tell me to remain in G-Fund.  I have looked, trust me.   Everything that I use tells me to return to stocks.   As such, I am returning to stocks, via 100% S-Fund.

Thank you and Happy Thanksgiving

-Bill Pritchard

New Bull Market or a Trump Rally ?

 

Good Afternoon Folks

Hope all is well…today is Nov-19, and we are approaching the customary two-week mark after my last update on Nov-8.  Time to push out a new update in light of the Thanksgiving Holiday coming up.  Note that this is my first post-election post.

First (or BLUF as some would say), I remain 100% G-Fund.  I have received some “inquiries” (nice way of saying it…) as to my logic, in light of a pretty strong rally post-election, so maybe on today’s post I can explain things a little bit more.

The reader may recall my pre-election analysis, and my accurate and correct prediction that Donald Trump (DT) would win the election, a prediction which was published on Nov-8 at approximately 10:39 PM Central Time, and “against the odds” as reported by polls and major media outlets, who prophesied that Hillary would win.   As DT scored wins during the night, the Dow Jones Futures plummeted and Miley Cyrus sobbed.  Note that since Nov-2, I had been tucked safely into bed via the G-Fund.  Let’s take a look at the charts after the election:

sp500-11-19-16-closeup

sp500-11-19-16-closeup-comments

While we saw a pretty big rally the days after the election, things kind of subsided a few days afterwards, with volume declining.   Note that a 1.7% Daily Gain or greater, on above average volume, is needed, on the broader market indexes (Dow Jones, SP 500, NASDAQ), to really change the direction of the markets.  We did indeed have above average volume, but we did not have the 1.7% gain.  Also, my benchmark “market health” index, the SP 500, is basically in the same place today as it was in August, aka the 2180 area.   See chart:

sp500-11-19-16-comments

With all of that said, one may conclude I need to be more positive and embrace the Christmas Spirit, and wish for TSP cheer this holiday season.   Fear not, as I have plenty of reason to do so:   With DT elected, we have the potential for reduced regulation in all aspects of life, which will help business growth and expansion.   DT is apparently surrounding himself with folks with very strong resumes, and may be a subscriber to the “surround yourself with smart people, and turn them loose” theory of management.  With a Republican President, a Republican Congress, and some new agency heads being ex-Congressmen, one would think we can finally get something done in Washington.

Note that the stocks that rallied after the election were mostly all Dow Jones index components, I called this the “Trump Index” because everything else was flat.   The industries that rallied, per Bloomberg, are evident in this graphic:

trump-rally-graphic

The currently top sub-sector of the market is the Small Cap stocks, aka S-Fund, which indeed zoomed higher so far, since Nov-8.  However this is the same index that can crash hardest, if this rally is short-lived.   For those who are in the S-Fund, congratulations to some well deserved gains.   However, in my opinion, caution is the word of the day, as DT chooses his team and the market digests the new administration, which does not even begin until Jan 2017.  In other words, if the market is beginning to tick upward now, we may have a great next four-years.

I am closely monitoring the SP 500, I want to see a close price of above 2190, and I want volume to get a little stronger.    See chart:

sp500-11-19-16

sp500-11-19-16-closeonly-comments

2190 is an important resistance level, the good thing is, is that I think we can breach it soon.  If that occurs, and if volume starts to pick up, I will likely exit the G-Fund and return to stock funds.  Until the market itself tells me otherwise, I will remain in G-Fund.  Expect light trading volume next week due to the holiday, market will likely be flat.  FYI

That is all I have for now, Happy Thanksgiving and safe travels !

-Bill Pritchard

 

 

 

Predicted Winner = Donald Trump, Dow Jones futures down 600 points

 

Good Evening

My crystal ball at 10:30 PM Central Time on 11-08 is predicting a Donald Trump win for our next President.  This is due to:

  1. Hillary narrowly won Virginia, with 48% versus Donald 46%.   I consider this narrow because Hillary’s VP, Tim Kaine, is former mayor of Richmond, the capital, is a former Governor of the State, and a former US Congressman from the State.   You would think that Virginia would have been a “done deal” for her yet DT almost snatched it from her.  I consider this important as it likely represents the sentiment nationwide, regarding a desire for change.  If he can almost take Virginia, he can own most anything else.
  2. Donald is on track to win Florida, yes narrowly but in light of all of Donald’s tough talk on immigration policies and the anti-DT energy by the Latino community, this is commendable that he was able to seize Florida.  Again, if he can “pull this off” then his power has previously underestimated.  Note:  not declared official win yet.
  3. North Carolina and Ohio, believed to be critical for Hillary, just went DT.
  4. He is pulling this off by himself.  Hillary has Obama and ex-POTUS Bill Clinton (basically two Presidents) on her team who have been out cheerleading for her.  Yet DT is still able to perform.

In sum:  I anticipate Donald Trump as our next US President.   The overnight futures markets (we saw financial markets celebrate a no-criminal prosecution on Hillary a few days ago) reacted violently, with Dow Jones Futures moving down 600 points.  The world financial markets are clearly worried by a DT victory, and his strong stances on various issues.   See chart:

dow-jones-futuresRecall that on Nov-2, I posted my TSP change over to G-Fund, out of an abundance of caution.   Six days later, we are in an election where the “underdog” has (so far) knocked it out of the park.   Additional volatility is expected, as is a possible last minute surprise Hillary comeback, although I doubt it.   Again, my move to G-Fund was out of caution, and dare I say it,  I am rarely wrong or incorrect with market calls.  Here we are, yet again, with storm clouds and heavy rain looming ahead, and I sought shelter early.

There are other TSP analysis sites out there, both free and paid, my opinion is those sites have been very reckless and irresponsible advocating anything but G-Fund in such a volatile period, with obvious market signals of a downtrend.  Maybe obvious to me, but not them.  “It is just a paper loss” is only heard when they lose money, however when the same sites magically cause a gain to happen [even a broken clock is correct twice a day], you never hear that it was a “paper gain.”  No, that is never heard.   We have a lot of smart subscribers here, many who have been with me for years, use your sound judgement when you come across those other sites and snake oil salesmen.

Will the markets come back ?  Sure, they “always do” as many like to say, many even remind me this.   “Always do” however carries an unknown timeline to it.  They may come back next week, or next year.  I am unwilling to catch falling knives or ride in cars that are flying off cliffs.

I remain 100% G-Fund until further notice.  Thanks for reading !

-Bill Pritchard

 

Pre-Election Day Market Analysis

Hello Everybody

If there is any doubt what candidate the markets favor, that doubt was cleared up on Monday Nov-7, when all indexes rallied strong, with the often watched Dow Jones Index gaining 371 points.   However volume was lackluster and this was indicative that institutional investors were not behind the Nov-7 rally, and instead it was “dumb money” versus “smart money” at work today.  Lets look at some SP 500 charts:

sp500-11-07-16

sp500-11-07-16-graphics

Apparent is that the volume was lower than the prior trading day volume (that day would be Nov-4), also apparent is the volume was noticeably less than the heavier “sell off” days of Oct-27, 28, Nov-1, 2.  Such sell-offs basically need same, or greater, volume, combined with a gain in the index, to “overcome” those prior down days.  None of that occurred today.   As evidenced by the below chart, the SP 500 is in a downward “channel“, based on deteriorating price action causing the trend to slope downward, this channel is determined by taking recent highs and recent lows and establishing trendlines:

 

sp500-6month-11-7-2016sp500-6month-11-7-2016-graphics

The SP 500 is basically operating with a sloping overhead resistance line of 2150, and a sloping support line of 2070, it is bouncing within the confines of this channel like a pinball.  A break-thru of these lines, combined with high volume, is indicative of a probable continued move in that direction.

In summary:  A rally such as today is always welcome.  However further inspection reveals not all is what the cover of the book would lead you to believe.

I remain 100% G-Fund until further notice.   Thanks for reading and talk to you soon.

-Bill Pritchard

 

 

 

Cautionary move to 100% G-Fund

 

Hello (Nervous) Readers

I know it is time for an update when my page views hit record levels, the count has increased every day as we get closer to the election, as has my inability to sleep and an increase in blood pressure.  I have said before, if you can’t sleep at night because of your investments, you need to “sell until you reach the sleeping point.”  With that said, my personal stock choices have really done well, they are a few technology names which I will not mention here but I am quite happy with.  I can also have them go to zero (while not desired…) and still pay my mortgage, so it is “hobby money.”   Our TSP accounts, however, are critical, for retirement income and peace of mind, and we cannot roll the dice with those.   So as my former Supervisor liked to say, BLUF (Bottom Line Up Front), I am moving my TSP to 100 % G-Fund, both Contribution Allocations and Interfund Transfer.  Note that per the TSP Website, changes made on the TSP website or the ThriftLine before 12 noon Eastern time are generally processed on that business day.  Requests made after 12 noon Eastern time are generally processed the next business day.  In short, any change made on Thursday Nov-3 should be fully processed by close of business Monday Nov-7.  The election is Nov-8.

Allow me to discuss my views of the markets and shed some light into my decision.   We are arguably in one of the most important elections in history, and clearly the broader markets, worldwide, are nervous.  No matter what party the voter identifies with, or what candidate he/she favors, everyone agrees that this election is important, due to a variety of domestic and international issues not seen before.  Gold Prices have recently ticked upward, which is consistent with “safe haven money flows” as major institutional investors exit equity/stock positions and seek “safe haven” for their money.   Not everyone is moving to Gold, some are moving to other investments, investments which are not really possible to determine but there is no question that major investors are exiting stocks.   As we know, “stocks” for TSP purposes are the C/S/I/some portion of L-Funds.    This movement out of stocks creates additional supply of shares on the markets, and thus pushes prices down, as at the end of the day, the stock market is an auction market, and it is supply and demand driven.  Yes, “earnings moves stocks” but earnings (good or bad) actually cause people to buy or sell stocks, and that action is what moves stock prices.   But lets not get tripped up over semantics here.   Visual explanations are always a good thing, so lets look at the SP-5oo Index charts:

sp500-11-2-16

sp500-11-2-16-graphics

sp-500-11-02-16-close-graphics

Evident in the above charts, is increased selling and downward trending action which began on Oct-25.   This is the same date that some additional news associated to the Presidential race/election was released.  Also evident is the index broke below its previously discussed 2120 level, and is now below lows established in mid-September.  Since Oct-25, we have seen above average selling/distribution volume on the SP-500 Index, with a distribution day count of 8.   Lets take a look at a chart of Gold Futures, you will see the sudden price uptick, commencing in late October.

gold-futures-11-2-16

gold-futures-11-2-16-graphics

Note that 4 to 7 Distribution Days in the stock indexes are enough to trigger concern, and any exceedence of that count (like now) is cause to ask “OK, why should I remain in stocks?”

As such, with a pretty major catalyst (political change, see my FAQ #6) in the works, an elevated distribution day count, and inflows to Gold (as demonstrated by its rising price), I will sleep much better right now if I move 100% G-Fund.

After the elections, stability may return to the markets, and I may return back to the stock funds.   Any triple-digit gains the morning after elections (please don’t email me and lambast me about “missed gains”)-  be careful and don’t count your chickens before they hatch, the markets have a unique ability to trick the investor into doing something he may regret.   I am going to step back, monitor the situation, and will not return to stock funds unless I am comfortable.

All my opinion, and subject to being wrong, but right now I would like to catch up on some missed sleep.   Thanks for reading and talk to you after the election !

-Bill Pritchard

FOMC Minute Analysis / Markets remain Volatile

 

Hello Everybody

Well, here we are again, where I find myself unfortunately reporting that the markets remain volatile, and largely Federal Open Market Committee (FOMC) driven.  You can look at the mainstream financial media for their own assessment of the FOMC Minutes, or you can read mine, the important parts highlighted in yellow, with my commentary in red, at this link:  fomc-minutes-9-21-16

The SP-500 Index remains bound by the 2120 support level and a recently developed 2170 overhead resistance level.  Please see charts:

sp500-09-21-2016sp500-09-21-2016-comments

You can look at the above charts and identify the sideways action from July 18 until present coincides with my lack of major reporting activity on this website.  It is almost as if Wall Street thinks it’s still summer.  We have been sideways since July, with some red flags along the way.

Any penetration of the 2120/2170 levels is cause to believe the move will continue in that direction, obviously the move downward, thru 2120, is more worrisome than any move upward, which I would be happy to see.  Indeed the market has had numerous “distribution days” in recent weeks, and remains problematic.  Markets sold off drastically on 10-11-16, on above average volume, a troubling sign.  On 10-12-16, the markets recovered somewhat, however on lower volume, possibly influenced by the Jewish Yom Kippur holiday, in which some market participants were not trading, resulting in lower volume.

In addition to the FOMC minutes (further analysis at above link), we have arguably the most watched (indeed the most Tweeted…) Presidential Election in history, and different schools of thought exist as to what candidate will benefit the market.  What is known, is that the markets do not like uncertainty, so once we are past elections, we hopefully will see some upward progress, when “new blood” is in the White House.   The below chart reflects some Polling Data (if you choose to believe it is credible)

polls-10-12-16

There is no doubt in my mind that two hot items remain the catalyst behind the market volatility:  1) Interest Rates and 2) Elections-  no larger, headline issues exist from an economic standpoint, at least none that I can see.  With that said, at the end of the day, we must respond to the market itself, not our crystal ball or our gut feelings, etc.  For now, the market itself is having challenges making upward progress, and any penetration below 2120 will be concerning.

Until then, I remain 50% S-Fund and 50% C-Fund.

Thank you for reading and talk to you soon !

-Bill Pritchard

 

 

As Previously Discussed – No Rate Hike

 

Hello Everybody

As I predicted previously on this site, no rate hike happened at the Sept 20-21 FOMC Meeting.  Inflation targets of 2%, have not been achieved (this too, has been discussed on this site, numerous times…), and thus this appears to have been the primary factor for the lack of a rate hike.  At the 35:40 time mark in the video, 2% inflation is pretty strongly mentioned, if you are a Yellen watcher like I am.  Full video is below:

The indexes responded very positively to this, with the often watch Dow Jones Index closing up 163 points for the day.   The tech-heavy NASDAQ attained a new All-Time-High (ATH) of 5299.40.   See chart:

nasdaq-9-21-16

International Stocks (I-Fund) responded best to today’s news, next was Small Cap stocks (S-Fund), then large cap stocks (C-Fund).   I personally am not participating in the I-Fund, but it indeed offers greater rewards (and risk) than the other funds right now.

Lets take a look at the FOMC Statement, issued after the meeting.  This is not the same as Ms. Yellen’s transcript, it is more of a summary of the FOMC overall sentiment:

Information received since the Federal Open Market Committee met in July indicates that the labor market has continued to strengthen and growth of economic activity has picked up from the modest pace seen in the first half of this year. Although the unemployment rate is little changed in recent months, job gains have been solid, on average. Household spending has been growing strongly but business fixed investment has remained soft. Inflation has continued to run below the Committee’s 2 percent longer-run objective, partly reflecting earlier declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation remain low; most survey-based measures of longer-term inflation expectations are little changed, on balance, in recent months.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market conditions will strengthen somewhat further. Inflation is expected to remain low in the near term, in part because of earlier declines in energy prices, but to rise to 2 percent over the medium term as the transitory effects of past declines in energy and import prices dissipate and the labor market strengthens further. Near-term risks to the economic outlook appear roughly balanced. The Committee continues to closely monitor inflation indicators and global economic and financial developments.

Against this backdrop, the Committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2 percent. The Committee judges that the case for an increase in the federal funds rate has strengthened but decided, for the time being, to wait for further evidence of continued progress toward its objectives. The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. In light of the current shortfall of inflation from 2 percent, the Committee will carefully monitor actual and expected progress toward its inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalization of the level of the federal funds rate is well under way. This policy, by keeping the Committee’s holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; James Bullard; Stanley Fischer; Jerome H. Powell; and Daniel K. Tarullo. Voting against the action were: Esther L. George, Loretta J. Mester, and Eric Rosengren, each of whom preferred at this meeting to raise the target range for the federal funds rate to 1/2 to 3/4 percent.

It is evident that the FOMC is pretty set on achieving 2% Inflation, and without this achievement, I do not see rates being raised.   The next meeting with a possible rate hike is December 13-14.

On Friday Sept-23 12PM Eastern Time, Federal Reserve Bank of Philadelphia President Patrick Harker, Cleveland Fed President Loretta Mester and Atlanta Fed President Dennis Lockhart participate in “Presidents’ Perspectives: The Fed’s Role in Our Communities in Philadelphia.   It is possible that interest rate discussions (but no action can be taken, this is merely a forum) will occur at this meeting.

Interesting is that the same talking heads on the cable business shows, to include major fund managers, all who erroneously “predicted” a rate hike to occur this September meeting, are now backpedaling and now claim that triple cross your heart, that a rate hike will occur in December “for sure.”  I suppose even a broken clock is correct twice a day.

Thanks for reading and talk to you soon.   Thanks for being a supporter.   I think I have analyzed these FOMC meetings for 2 years now and each time I “called it” with 100% accuracy.  Just saying…

I remain 50% S-Fund and 50% C-Fund.

-Bill Pritchard