After the fireworks of the previous week, the second week of June 2016 was extremely quiet by comparison.
Let's quickly run through the headlines and our notes for the week that was.Monday, 6 June 2016
- Fed's Lockhart, Bullard shift rate-hike focus to July - this is how you can tell the Fed has officially thrown in the towel on a June 2016 rate hike!
- Wall St. pours money into consumer staples as valuations climb
- S&P 500 ends at seven-month high after Yellen comments - investors have shifted their forward looking focus out to the distant future (more details below....)
- Weak U.S. productivity likely to remain a drag on profits
- Oil hits 2016 high on U.S. draw forecasts, Nigeria woes
- Global stocks rise to six-week high on Fed view, higher oil prices
- Hiring in April at slowest pace in nearly two years - remember that jobs are almost always a lagging indicator.
- Dollar index slips on fading view on U.S. rate hike
- Dollar at five-week low boost commodities; stocks gain
- Crisis-era red flag from dollar FX market flies high again - the red flag is a low supply of U.S. dollars and high demand for them.
- U.S. wholesale inventories post biggest gain in 10 months
- Wall Street retreats with oil prices after three-day rally - oil prices remain the most significant real mover of the S&P 500 - with oil prices rising, earnings for these distressed companies is improving, but the upside is limited because it isn't enough yet for them to boost their dividends - rising earnings are just taking the pressure off the potential need to cut them.
- Within sight of a record, Wall St. runs into a wall - the original headline for this article was "Wall St. down sharply on oil drop, global growth worries"
- Oil down 3 percent as U.S. drillers add rigs, strong dollar weighs
Following the crumbling of the Fed's plans to hike short term U.S. interest rates again after last week's dismal jobs reports on Friday, 3 June 2016, at present, it appears that investors have sustained their attention upon the expectations associated with the distant future represented by 2017-Q1 in setting U.S. stock prices. Which is pretty much why stock prices didn't move around a whole bunch last week.
More than that, they're running a bit to the high side of the typical range we would expect stock prices to fall within for investors focused on 2017-Q1. Since Friday, 17 June 2016 marks the expiration of futures contracts for 2016-Q2, we could see a bit of volatility related to that event. Assuming that some news event doesn't cause investors to suddenly shift their focus to another point of time in the future, or the onset of a speculative noise event.
Early next week, we'll get our first indication of what the expectations are for dividends that will be paid in 2017-Q2, which we'll present with our tally of the week's market moving headlines for Week 4 of June 2016.