Unexpectedly Intriguing!
July 29, 2019

The fourth week of July 2019 was far less noisy than previous weeks, thanks largely to the muzzling of the Fed's minions as they entered a communications blackout period in the week before they are set to reset short term interest rates onto a downward trajectory.

The following screenshot of the CME Group's FedWatch Tool's estimated probabilities of various potential rate cuts being announced at the Fed's upcoming Federal Open Market Committee meetings indicates that investors are now expecting just three quarter point rate cuts, with the first announced next week, the second before the end of 2019-Q3, and better than even odds of a third rate cut being announced in 2020-Q1.

CME Group FedWatch Tool Probabilities of Federal Funds Rate Changing at Future FOMC Meeting Dates, Snapshot on 26 July 2019

In the welcome silence from Fed officials, investors focused instead upon stronger than expected earnings being reported during the week, and the better than expected GDP reported by the U.S. Bureau of Economic Analysis for the second quarter of 2019.

The combination of news kept investors focused on 2020-Q1 in setting stock prices, as they lifted the S&P 500 (Index: SPX) to a new record high closing value.

Alternative Futures - S&P 500 - 2019Q3 - Standard Model - Snapshot on 26 Jul 2019

Here are the headlines that stood out to us during the week that was the fourth week of July 2019:

Monday, 22 July 2019
Tuesday, 23 July 2019
Wednesday, 24 July 2019
Thursday, 25 July 2019
Friday, 26 July 2019

Elsewhere, Barry Ritholtz found the negatives outweighed the positives in the week's news flow, identifying 6 positives and 8 negatives.

This upcoming week will hopefully be mostly quiet, but once we get past the FOMC's end-of-July meeting, we expect the news will return to higher noise levels. How that might affect how far forward in time investors cast their attention remains to be seen.

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