Getting Closer to Break-even

March 14, 2016

In the absence of any significant domestic economic headwinds, stocks were able to advance for the 4th consecutive week. The S&P 500 advanced 1.1% to 2022.18, regaining the level of its 200-day moving average of 2019.9, but still down 1.1% YTD.

Thursday’s European Central Bank policy meeting [temporarily] fulfilled all of the bulls’ hopes. The new stimulus included expanding quantitative easing by 33% [to €80 B/mo!] and added corporate bonds to its asset purchase program. Unfortunately, [or fortunately, depending on your position and time-frame] the euphoria was short-lived, since Mario Draghi suggested that rates were unlikely to be pushed any lower.

This week’s calendar is much more active, with retail sales, inflation, industrial production, employment energy and sentiment all vying for attention. Nonetheless, central banks will likely still hog the spotlight, with the Fed releasing its latest policy statement on Wednesday. The markets are not expecting any change in rates this month but are looking for additional FF increases this year. The Fed’s “dot plots” will confirm [or not] this likelihood.

“Monetary policy does not work like a scalpel but more like a sledgehammer” Liaquat Ahamed