Will the Fed get schooled in Sept?

Pre-market equities and bonds appear to have no memory of last week’s sell-off.

Dead-cat bounce? I don’t think that’s the case.

China overnight put up some horrible economic numbers for manufacturing and trade that had its stocks moving higher.

So we are back to bad numbers being good for stocks as monetary tightening looks to pushed further out.

In a deflationary recession-prone economy, such as what we are seeing globally, the central bank playbook is to be accommodative. That means low rates — and for most economies — intervention in the markets.

Whether that’s the Fed buying up paper as in its QE experiments or buying S&P futures to buoy stocks, it all perverts the markets.

US retail growth will be determined in the next two weeks or so with the 2nd largest shopping season, back to school.

Anyone who has been to stores — and for analysts it’s called channel checks — there are already 50% off sales. Not good for margins and stock prices.

The Fed will have spending data and Aug payroll numbers before it meets in mid-September to decide on rates.

As you know, I say they stand pat but paying lip service to a growing economy to placate the bond vigilantes, who want and need higher rates.


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