Investors Keep Waiting on the Fed – What’s Next?


U.S. stocks are rallying somewhat this morning, with the Dow spiking up some 200 points and change in early trading.

As analysts keep telling us, investors are looking toward this week’s Fed meeting and any news tomorrow about potential interest rate cuts.

We also have new remarks from European regulators, with BB saying that the European Central Bank would also consider stimulus.

Other looming items on today’s landscape include U.S. housing starts data, as well as earnings by Barnes & Noble and Oracle.

U.S. housing starts were released this morning, showing building permits at .3 percent above April projections, but down .5 percent year over year (from May 2018). U.S. Census press release data states:

“Privately‐owned housing starts in May were at a seasonally adjusted annual rate of 1,269,000.  This is 0.9 percent below the revised April estimate of 1,281,000 and is 4.7 percent below the May 2018 rate of 1,332,000.  Single family housing starts in May were at a rate of 820,000; this is 6.4 percent below the revised April figure of 876,000. The May rate for units in buildings with five units or more was  436,000.”

(go to the site for specific breakdown of these numbers)

Although U.S. index activity has been green for a while, many experts are warning about potential corrections.

These are not just cyclical corrections, but corrections based on negative trade activity which is set to kick in over the coming weeks.

Resources from the Tax Foundation, for example, show the likely results of new tariffs in the automotive sector:

“The Tax Foundation model estimates that if the Trump administration imposes additional tariffs on automobiles and parts, additional tariffs on products from China, and tariffs on products from Mexico, GDP would fall by an additional 0.45 percent ($112.23 billion), resulting in 0.30 percent lower wages and 347,988 fewer full-time equivalent jobs.”

“We know firsthand that the additional tariffs will have a significant, negative, and long-term impact on American businesses, farmers, families, and the US economy,” wrote over 600 companies in a letter to the Trump White House, according to Nathaniel Myersohn’s CNN Business report June 14. “An escalated trade war is not in the country’s best interest, and both sides will lose.”

New tariffs mean higher prices for customers, and we’ve not seen that yet, but we’re going to.

Keep an eye out.