Unexpectedly Intriguing!
October 8, 2018

In the first week of October 2018, S&P 500 (Index: SPX) continued to firmly fix their forward-looking focus on 2019-Q1 in setting stock prices.

At least that's our takeaway from observing the trajectory of the S&P 500 against what our dividend futures-based model projects should happen when investors are closely focused on 2019-Q1, as shown on our spaghetti forecast chart.

Alternative Futures - S&P 500 - 2018Q3 - Standard Model - Snapshot on 5 Oct 2018

And since the third quarter of 2018 is now long past over, it's time to roll the chart forward to see what our model projects for 2018-Q4....

Alternative Futures - S&P 500 - 2018Q4 - Standard Model - Snapshot on 5 Oct 2018

We believe that investors are primarily focusing on 2019-Q1 because of the current uncertainty for whether or not the Fed will hike interest rates in that quarter, where as of Friday, 5 October 2018, the CME Group's FedWatch tool is now indicating a 57.2% probability that the Fed will follow up a quarter point rate hike in December 2018 with another one in March 2019.

That the odds of a 2019-Q1 rate hike are better than even is a relatively development, where there has been a lot of movement in the interest rate futures trading that helps determine the probability in recent weeks. As for what other new information was noteworthy during Week 1 of October 2018, the following list captures the headlines that we believe were most influential.

Monday, 1 October 2018
Tuesday, 2 October 2018
Wednesday, 3 October 2018
Thursday, 4 October 2018
Friday, 5 October 2018

For more of the week's other economics and market-related news, be sure to check out Barry Ritholtz' succinct summary of the week's positives and negatives.

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