The 'Epic Unwind' can be irregular and impacted by more than the FOMC's rate decision of course. The events in New York, New Jersey, Minnesota and Syria... all remind us of the tenacious status of stability in the world today. When the majority of people, regardless of political views (here and abroad), feel a sense of 'angst' or more; you know there's something wrong; as most people are normally focused on their daily lives of course, and not often frazzled by global financial or other inputs.
There is no need to again repeat or try to debate what the Fed will or won't do on Wednesday; which is a topic everyone has a view about, but nobody knows (even the Fed itself is likely insecure regardless of which way they go).
I think the stories about Russia running 'out of cash' (32 billion reserves is ludicrous and not just due to oil prices, though that's the largest part of it), should not calm a cynical politician who thinks that will tame Putin's increasingly military buildup. For that matter history suggests the opposite when nations come under such pressure. And that's why (not that I care for either personality) Putin probably believes Trump would be more inclined toward a reconciliation with Russia over Ukraine, Crimea as well as other issues; and I touch on this in the video.
A 'train' of mediocre economic data likely contributed to the market's rebound if one wants a reason. However it was triggered primarily by an aversion to probing a 'vacuum' as I term it underlying the recent lows; plus it's Quarterly Expiration.
The idea remains that this market (or the factors that levitated it) is a 'ticking time bomb', that's not going to survive this time-zone intact. Yes, there are arguments of a Fed on-hold because of the data; or for that matter politics (as Trump believes). I think the impact of the FOMC moving or not moving, will have a response outlined in the video; and either way sets-up an ensuing continuation of market purges.
If not for Apple (AAPL) and relative Oil Index stability, this market could not achieve this; so it's notable some 'chatter' presumes major institutions are under-invested in Apple. Perhaps so for a few (or guys like Icahn who liquidated a lot); but generally portfolio guidelines don't embrace hanging onto stocks that are winners as they become the largest holdings. That propensity to diversify (mentioned it yesterday) is probably a reason you hear otherwise; to give the impressive that huge buying is still pending.
Tension on the tape prevailed through much of Wednesday's session; partially just a reaction to the early stages of expiration (some options settled at the opening); while the Oil and Bond markets dominated the early considerations. Technically it simply attempts a holding action with a great deal of angst about potentially breaking recent lows later.
We're not 'at the dawn' of a possible shift in rates; we're well into it. That's precisely why the Fed feels challenged, as many 'pretend' the Fed is the only influence to contend with. Because the entire Fed Balance Sheet is a fraction of global debt, it nevertheless tends to be a benchmark when the Fed moves. Whether they do or they don't is overlooked as being secondary to what the actual credit markets are doing. That's a primary reason I've noted they've been behind the curve already; while holding press briefings expressing it as a 'danger' that they want to avoid, so might move before that happens. It happened.
Again that doesn't mean they move; it means that they should have by now. Instead, we hear lots of talk ranging from the sluggish economy to the political impact, and not what's truly important, such as the fact that rates have been nudging-up without them, and that a great degree of pressure (rather than spin) upon Congress for fiscal reform and moves is entirely tardy. The real risk is that we're facing 'structural' issues (we are) not merely a slight modification in monetary policies.
Everything that's happening here is less a response to politics (or even battles that evolve about) global monetary policies; or even the FOMC coming up. It's really an effort to generate some 'cushion' above the very low 2100's in the S&P; so that if a determination comes forth next week that the market likes; they hope it's again off to the races. My view is that it won't be 'off to the races' regardless, although, sure, we should get alternating volatility surrounding the Fed's decision; maybe even the relief they want that it's simply behind.
Bottom line
We suspect this market remains at-risk regardless of the Fed moves, and despite relief efforts whether they hike or not. Primarily this is a structural issue from a technical perspective; of a market trying to avoid possibly compelled selling; if the recent lows come out. Also; the Consumer Product Safety recall on Samsung Galaxy Note 7 has not just hurt them (even as it's a battery provider quality issue), but helped Apple, as it probably brought over a lot of Note buyers to iPhone 7 Plus.
If and as Apple and Oil move up or down; so will the market at this point. Internally a lot of stocks are trending lower overall (for weeks or months) and that is obscured by a handful that aren't; which is partially how the Street gives an illusion of stability that exceeds reality. Tension on the tape persists through all of this. There is no change in our overall status (including the estimated December S&P 2180 short-sale guideline); thus we'll leave the overview entirely to video today.
Weekend (final & Sunday reflections) MarketCast
Post-close (intraday summary) MarketCast
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