the fomc downgrades the us economy, stocks rise

8/8/2019 The FOMC Downgrades the US Economy, Stocks Rise

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Richard Suttmeier is the Chief Market Strategist at www.ValuEngine.com.ValuEngine is a fundamentally-based quant research firm in Newtown, PA. ValuEnginecovers over 7,000 stocks every day.

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September 22, 2010 The FOMC Dow ngrades the US Econom y, Stoc ks Rise

The 10-Year US Treasury yield tested my monthly pivot at 2.562 this morning on Fed induced

risk aversion. Gold trades to another all time high at $1295.8 this morning with a daily riskylevel at $1296.7. Crude oil is between monthly and annual pivots at $74.45 and $77.05. The euromoves above its 200-day simple moving average at 1.3218 for the first time since January 19 th,and approached its August 6th high at 1.3334. The Dow remains extremely overbought on itsdaily chart but grinds higher on its journey towards my annual pivot at 11,235 by Election Day.The FOMC downgrades the US economy, but Housing Starts rise by 10.5% unexpectedly. TheGreat Credit Crunch that began in March 2007 continues.

10-Year Note (2.596) Daily, annual and annual value levels are 2.647, 2.813 2.999 with a monthlypivot at 2.562, and quarterly, weekly and semiannual risky levels at 2.495, 2.487 and 2.249.

Courtesy of Thomson / Reuters


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Comex Gold ($1289.3) Monthly, semiannual, quarterly and annual value levels are $1263.8, 1260.8$1218.7, $1140.9 and $1115.2 with a weekly pivot at $1283.5 and daily risky level at $1296.7.


Nymex Crude Oil ($74.92) Weekly and quarterly value levels are $72.72 and $56.63 with a monthlypivot at $74.45, and daily and annual pivots at $76.84 and $77.05, and semiannual risky level at

$83.94.



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The Euro (1.3239) My weekly value level is 1.2902 with a daily risky level at 1.3350. Quarterly andmonthly value levels are 1.2167, 1.1721 and 1.1424 with semiannual risky level at 1.4733.


Daily Dow: (10,761) Weekly, annual, monthly and quarterly value levels are 10,445, 10,379, 10,164and 7,812 with my semiannual pivot at 10,558, and daily and annual risky levels at 10,826 and 11,235

My annual risky level at 11,235 was tested at the April 26

th

high of 11,258.01. The Dow hasbecome extremely overbought.



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FOMC Downgrades Economy Sets Stage for QE 2

Information received since the Federal Open Market Committee met in August indicates thatthe pace

of recovery in output and employment has slowed in recent months. Household spending isincreasing gradually, but remains constrained by high unemployment, modest income growth,lower housing wealth, and tight credit. Business spending on equipment and software is rising,though less rapidly than earlier in the year, while investment in nonresidential structures continues tobe weak. Employers remain reluctant to add to payrolls. Housing starts are at a depressedlevel.Bank lending has continued to contract, but at a reduced rate in recent months. TheCommittee anticipates a gradual return to higher levels of resource utilization in a context of pricestability, although the pace of economic recovery is likely to be modest in the near term.

Measures of underlying inflation are currently at levels somewhat below those the Committee judgesmost consistent, over the longer run, with its mandate to promote maximum employment and price

stability. With substantial resource slack continuing to restrain cost pressures and longer-term inflationexpectations stable, inflation is likely to remain subdued for some time before rising to levels theCommittee considers consistent with its mandate.

The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent andcontinues to anticipate that economic conditions, including low rates of resource utilization, subduedinflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for thefederal funds rate for an extended period. The Committee also will maintain its existing policy ofreinvesting principal payments from its securities holdings.

The Committee will continue to monitor the economic outlook and financial developments and isprepared to provide additional accommodation if needed to support the economic recovery and to

return inflation, over time, to levels consistent with its mandate.

NET-NET The pace of recovery in output and employment has slowed in recent months. Household spending is increasing gradually, but remains constrained by high

unemployment, modest income growth, lower housing wealth, and tight credit.

Employers remain reluctant to add to payrolls. Housing starts are at a depressed level. Bank lending has continued to contract.

The NBER tells us that the recession ended in June 2009, but I re-iterate that The Great Credit

Crunch continues unabated.

Back in March 2007 everyone said subprime was contained. I said subprime was the tip of theiceberg. I said, Goldilocks Is Getting Wrinkles! I called for a Recession in 2008 / 2009 and for thebeginning of a Bear Market for stocks by the end of 2007. This is when The Great Credit Crunchbegan!The home builders had already peaked in July 2005, community banks peaked at the end of2006, and the regional banks peaked in February 2007 signaling the start of The Great CreditCrunch, which continues today based upon the current Federal Reserve concerns.


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Housing Starts Rose 10.5% in August as Builders Struggle to obtain Financing - The NationalAssociation of Home Builders describe the rise as bringing the pace of production more in line withconstruction activity before the home buyer tax credit temporarily stimulated sales earlier in the year.

Single home sales increased only 4.3% to 436,000 units still 9.1% below the pace of August 2009 asbuilders had difficulty obtaining finance and amidst concerns about sustained demand.

Thats todays Four in Four. Have a great day.

Richard SuttmeierChief Market StrategistValuEngine.com(800) 381-5576

Send your comments and questions to [email protected]. For more information on our productsand services visit www.ValuEngine.com

As Chief Market Strategist at ValuEngine Inc, my research is published regularly on the website www.ValuEngine.comI have daily, weekly, monthly, and quarterly newsletters available that track a variety of equity and other data parameters awell as my most up-to-date analysis of world markets. My newest products include a weekly ETF newsletter as well as the

ValuTrader Model Portfolio newsletter. You can go HERE to review sample issues and find out more about my research.

I Hold No Positions in the Stocks I Cover.

the fomc downgrades the us economy, stocks rise

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