Unexpectedly Intriguing!
27 November 2017

Over the last two weeks, the S&P 500 continued its slowly upward trajectory and set new record highs, closing above 2,600 for the first time ever on the Friday following Thanksgiving 2017.

From our perspective, investors appear to be closely focused on the distant future quarter of 2018-Q2 in setting current day stock prices.

Alternative Futures - S&P 500 - 2017Q3 - Standard Model - Snapshot on 24 November 2017

There's an important caveat to note at this point however. Following the release of the minutes from the Fed's Federal Open Market Committee meeting on 31 October-1 November 2017 meeting, which confirmed that the Fed is all but set to announce a hike in short term U.S. interest rates at the end of its' 13 December 2017 meeting, the CME Group's FedWatch tool is now indicating that there is over a 50% probability that the Fed will move to hike short term U.S. interest rates again by the end of the first quarter of 2018, rather than waiting until the end of 2018-Q2 as the futures for the Federal Funds Rate had previously indicated.

Probabilities for Target Federal Funds Rate at Selected Upcoming Fed Meeting Dates (CME FedWatch on 15 September 2017)
FOMC Meeting Date Current
100-125 bps 125-150 bps 150-175 bps 175-200 bps 200-225 bps 225-250 bps
13-Dec-2017 (2017-Q4) 0.0% 91.5% 8.5% 0.0% 0.0% 0.0%
12-Mar-2018 (2018-Q1) 0.0% 49.2% 46.0% 4.7% 0.1% 0.0%
13-Jun-2018 (2018-Q2) 0.0% 24.0% 46.0% 26.0% 3.9% 0.2%
26-Sep-2018 (2018-Q3) 0.0% 14.4% 36.5% 33.4% 13.3% 2.3%

With investors shifting their focus to that nearer-term future quarter, our dividend futures-based forecasting model suggests that the future trajectory for the S&P 500 will likely shift downward toward the lowest alternative future trajectory shown in our spaghetti forecast chart above.

On top of that, we're also coming up on another one of those periods where the echo of past volatility in U.S. stock prices will affect the accuracy of our forecasting model, which is a consequence of our model's use of historic stock prices as the base reference points from which we project future stock prices. Since the duration of this upcoming echo effect is comparatively short, rather than add a new forecast range to the chart, we'll simply note that we expect that our standard model's forecast will overshoot the actual trajectory of the S&P 500 during the next two weeks, absent a new noise event for the U.S. stock market.

With that said, let's catch up with the major market-moving headlines that caught our attention over the last two weeks.

Monday, 13 November 2017
Tuesday, 14 November 2017
Wednesday, 15 November 2017
Thursday, 16 November 2017
Friday, 17 November 2017
Monday, 20 November 2017
Tuesday, 21 November 2017
Wednesday, 22 November 2017
Friday, 24 November 2017

Over at The Big Picture, Barry Ritholtz succinctly summarized the pluses and minuses for the U.S. economy and markets for both Week 3 and Week 4 in November 2017.

Labels: ,

About Political Calculations

Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:

ironman at politicalcalculations.com

Thanks in advance!

Recent Posts

Stock Charts and News

Most Popular Posts
Quick Index

Site Data

This site is primarily powered by:

This page is powered by Blogger. Isn't yours?

CSS Validation

Valid CSS!

RSS Site Feed

AddThis Feed Button


The tools on this site are built using JavaScript. If you would like to learn more, one of the best free resources on the web is available at W3Schools.com.

Other Cool Resources

Blog Roll

Market Links

Useful Election Data
Charities We Support
Shopping Guides
Recommended Reading
Recently Shopped

Seeking Alpha Certified

Legal Disclaimer

Materials on this website are published by Political Calculations to provide visitors with free information and insights regarding the incentives created by the laws and policies described. However, this website is not designed for the purpose of providing legal, medical or financial advice to individuals. Visitors should not rely upon information on this website as a substitute for personal legal, medical or financial advice. While we make every effort to provide accurate website information, laws can change and inaccuracies happen despite our best efforts. If you have an individual problem, you should seek advice from a licensed professional in your state, i.e., by a competent authority with specialized knowledge who can apply it to the particular circumstances of your case.