Monday recap: We started the week with a very uneventful day in terms of price action with the Major Market averages settling +/- 0.2% from unchanged, although much closer to their lows of the day than their early morning highs.
With 2 days to go until we close the books on Q1 we’re right where we were at the end of last week, virtually flat YTD for the DJIA and S&P500, but a “Kick Save and a Beauty” from where we were in the middle of the quarter 6 weeks ago.
The biggest impact news item Monday was the Atlanta FED lowering their estimate for Q1 GDP to +0.6%.
This is quite striking since less than 6 weeks ago they were at +2.6%. With a second straight month of negative durable goods orders and ISM numbers that are struggling the hold the Mendoza line at 50.0; the Atlanta FED now joins the company of 4 or 5 other leading economic forecasting teams calling for a sub 1.0% Q1 GDP.
The only thing good that can come from this is the possibility to under promise and over deliver. The problem with this scenario is that we’re talking macroeconomic data not corporate earnings reports.
Regardless, the bar for Q1 is now quite low. It will be interesting to see if the market adjusts to it.
This brings us to the FED.
Chair Janet Yellen is the keynote speaker at the New York Economic Club and you would have to expect she’ll get peppered with questions on how many rate hikes to expect the remainder of this year, particularly in light of comments from St Louis FED President Bullard last Friday that rate hikes should resume soon, possibly as early as the next meeting in late April.
It’s a FED Speak Tuesday 3-29-16
The Early Line: US Equity futures are projecting a lower opening later this morning, with declines expected of slightly less than half of 1 percent. That basically sets of a test of the lows from Friday morning and possibly the 200 day moving average on the S&P 500 at 2016.65.