Historically, the markets react differently after a presidential debate depending upon who it perceives as the debate winner. Regardless of who your candidate is, the market will respond with its own perception. Here is what we believe could happen in either scenario.
This morning we had a lot of debate on whether or not the Fed model is broken. The Fed model uses a lot of indicators and data to determine whether or not to raise or lower rates. If you look under the hood, there is some weakness there that might give the Fed pause in September.
The S&P 500 has currently gone 40 sessions without as much as a 1% move up or down. There is no crisis to fix and this is creating bored and dangerous investors. There is a difference between a bored and a shrewd investor.
Investors are frustrated over the market uncertainty that is being created by the Fed. The Fed seems to be playing a word game which is hurting the markets and creating market volatility. More in the video.
This week should give investors an idea of where the market is going and what could cause their portfolio to increase. We believe that the Fed is on the back burner which could allow the market to continue to rally.
As we continue to look at the second half of the year, we are already seeing some market surprises. On Friday we saw a surprise in the jobs report. Expectations are so low for corporate earnings that we are looking to take advantage of possible stock market surprises.