SQUAWK BOX WEEKLY UPDATE – 9/14/15

UNIVERSITY OF DENVER – SQUAWK BOX WEEKLY UPDATE

Monday September 14, 2015

MARKETS PERFORMANCE / CURRENT TRADING RANGE

  • The S&P 500 rose +2.1%* last week (holiday shortened week), rising from 1,921 on Friday, 9/4 to a close of 1,961 on Friday, 9/11.
  • With a modest drop of -0.4% today (Monday, 9/14), the benchmark index is currently at off -8.3% from its all-time record closing high of 2,131 reached on 5/21/15.
  • The S&P 500 was range-bound (nearly 100 point range) for roughly three months (May-July), trading sideways between 2,040 and near record territory of 2,120, before falling convincingly below the 200-day moving average in late August.
  • Volatility has increased since late August, as the S&P 500 dropped as much as -12% to a recent low of 1,867 (level last seen in October of 2014).
  • Recent losses have been pared a bit, with the broader markets recovering nearly +5% over the last couple of weeks.
  • Nevertheless, volatility has returned these past two weeks, with 500-1,000 intraday swings once again occurring on a more regular basis.

MARKET DRIVERS (*Level of Importance/Weight in Descending Order)

SHORT-TERM (ST) DRIVERS:

  1. Federal Reserve’s Interest Rate Hike
  2. Continuation of Risk-On/Risk-Off
  3. Chinese Economy Slowing / Market Turmoil

 LONG-TERM (LT) DRIVERS:

  1. Currency Wars
  2. Global Debt Levels
  3. Geopolitics and Terrorism

MAJOR EVENTS ON THE HORIZON

  • Bank of Japan’s two-day policy meeting
  • FOMC Decision on Interest Rates
    • September 17 (with Press Conference)
    • October 27-28
    • December 16 (with Press Conference)
  • UN General Assembly’s 70th session next week
  • China’s President Xi Jinping and President Barack Obama meeting on September 25
  • Another Government Shutdown on September 30/October 1?

References:

Acheson, Andrew. (2015). Could Markets See More Volatility After Fed Decision? Bloomberg:  http://www.bloomberg.com/news/videos/2015-09-15/could-markets-see-more-volatility-after-fed-decision-

Brownlee, Lisa. (2015). Obama To Discuss Cyber-Espionage Concerns With China’s President Xi. Forbes: http://www.forbes.com/sites/lisabrownlee/2015/09/14/obama-to-discuss-cyber-espionage-concerns-with-chinas-president-xi/

Buttonwood. (2015). Forecasting a global recession. The Economist: http://www.economist.com/blogs/buttonwood/2015/09/economics?fsrc=gp_en?fsrc=scn/tw/te/bl/ed/forecastingaglobalrecession

Durden, Tyler. (2015). Record Gap Between US Inventories and Sales Screams Recession. Zero Hedge:  http://www.zerohedge.com/news/2015-09-10/us-recession-looms-wholesale-sales-tumble-more-inventories

Ellis, Lincoln. (2015). The Fed Should Raise Rates Already. Bloomberg:  http://www.bloombergview.com/articles/2015-09-01/why-the-federal-reserve-should-raise-interest-rates

Federal Open Market Committee. (2015). Board of Governors of the Federal Reserve System: http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm

Federova, Anna. (2015). BIS issues fresh warning as global debt levels rocket. Investment Week: http://www.investmentweek.co.uk/investment-week/news/2425749/bis-issues-fresh-warning-as-global-debt-levels-rocket

Fram, A., Taylor, A. (2015). GOP leaders’ complex fight to avoid federal shutdown. Yahoo!:  http://news.yahoo.com/gop-leaders-complex-fight-avoid-federal-shutdown-115030078.html

Grant, Harriet. (2015). What is the UN general assembly? The Guardian: http://www.theguardian.com/world/2015/sep/14/what-is-the-un-general-assembly

Hilsenrath, John. (2015). San Francisco Fed’s Williams Sees Rate Increase ‘This Year,’ if Risks Dissipate. The Wall Street Journal: http://www.wsj.com/articles/san-francisco-feds-williams-sees-rate-increase-this-year-if-risks-dissipate-1441658566

IMF Communications Department. (2015). Lagarde Urges More Global Action to Support Growth and Jobs. International Monetary Fund: http://www.imf.org/external/np/sec/pr/2015/pr15403.htm

Moreano, Giovanny. (2015). Goldman: Rising rates will hit these stocks hard. CNBC:

http://www.cnbc.com/2015/09/14/goldman-rising-rates-will-hit-these-stocks-hard.html

Prins, Nomi. (2015). Nomi Prins, Keynote Speaker Who Recently Addressed The Fed, IMF And World Bank, Warns Of Total Global Collapse. King World News: http://kingworldnews.com/keynote-speaker-recently-addressed-the-fed-imf-and-world-bank-warns-of-total-global-collapse/

Rickards, James. (2015). Extended interview with US economist and author Jim Rickards. The Business. ABC: http://www.abc.net.au/news/programs/the-business/

Rollins, Blaine. (2015). Keep Playing Defense. 361 Capital Weekly Research Briefing. 361 Capital:

http://www.361capital.com/weekly-briefings/keep-defense/?mkt_tok=3RkMMJWWfF9wsRoku67PZKXonjHpfsX56usqUKC2lMI%2F0ER3fOvrPUfGjI4ERcFjI%2BSLDwEYGJlv6SgFSrnEMbd1zbgOWBE%3D

Schiff, Peter. (2015). Ep. 108: Weak Data Belies Fed’s Upbeat Narrative. YouTube: https://www.youtube.com/watch?v=dqFKMu2hy3E

U.S. 10 Year Treasury. (2015). CNBC:  http://data.cnbc.com/quotes/US10Y

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