There are a couple of key events we are looking at today.
- The ADP employment report at 8:15am could offer a guide to the all-important Payroll Employment report on Friday. Current consensus expectations are for a rise of 181K vs. 271K in the prior month. It is unclear how the government shutdown impacted private businesses that do business with the government, but we believe a lower than expected reading would support the Fed not raising interest rates anytime soon.
- The FOMC ends a two day meeting that is followed by a policy statement release at 2pm, and a press conference at 2:30pm. Remember the last press conference was the catalyst for the decline into the Christmas Eve low. We expect a much more measured press conference from Fed Chair Powell that suggests no rate hikes for the foreseeable future.
- There should be increased commentary regarding the economic impact of the current cold snap throughout the country. Many local governments, Schools and businesses are closed due to dangerously low temperatures. The dampening economic effect gives the Fed even more room to not raise rates over coming months.
There is no question the global economic data has been weakening, which should be considered a good thing because it was the fear of a synchronized global tightening that kickstarted the 4Q/18 market swoon. Clearly, the expected correction became a historic market event that became too extreme, and now we should be focused on upside opportunity rather than downside risk.
Past performance is not a guarantee of future results. All market data points and expectations are from Bloomberg as of 01/29/2019, and should not be relied upon as current thereafter.
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