Unexpectedly Intriguing!
01 July 2019

The S&P 500 (Index: SPX) didn't set any new records in the final week of 2019-Q2, but was still high enough to make the first half of 2019 the best for the index since 1997. Which is particularly impressive because that period saw what became known as the Dot Com Bubble begin to inflate.

Rather than look backwards however, let's look forward in time, through what our dividend futures-based model portends for the S&P 500 in 2019-Q3.

Alternative Futures - S&P 500 - 2019Q3 - Standard Model, with Redzone Forecast Between 21 June 2019 and 15 July 2019 Assuming Investor Focus on 2020-Q1 - Snapshot on 28 Jun 2019

The key to the S&P 500 remaining elevated during the quarter will be for investors to continue maintaining their forward looking focus on 2020-Q1. News that might force investors to shift their attention toward 2019-Q3 or 2019-Q4 will be associated with a significant decline in stock prices, while a shift in their forward-looking focus toward 2020-Q2 would be accompanied by a serious decline in stock prices.

As for what might cause investors to shift their focus to that particularly dismal future quarter, a lot will hinge on whether investors come to anticipate the Fed hiking interest rates a fourth time, with currently one quarter point hike each seemingly set for the next three quarters, at least, according to the Friday, 28 Juen 2019 snapshot of the CME Group's FedWatch Tool:

CME Group FedWatch Tool Probabilities of Federal Funds Rate Changing at Future FOMC Meeting Dates, Snapshot on 28 June 2019

Here are the headlines we extracted from the flow of news in the final week of 2019-Q2.

Monday, 24 June 2019
Tuesday, 25 June 2019
Wednesday, 26 June 2019
Thursday, 27 June 2019
Friday, 28 June 2019

Elsewhere, Barry Ritholtz identifies 6 positives and 6 negatives in his review of the last week of 2019-Q2's major economic and market-related news.

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