Unexpectedly Intriguing!
September 3, 2019

Perhaps the biggest event to affect expectations for the S&P 500 (Index: SPX) during the final week of August 2019 was also the least noticed.

Unless you paid attention to the CME Group's quarterly dividend futures for the index, you would have missed that the amount of cash dividends expected to be paid out by S&P 500 firms during 2020-Q1 increased from $14.50 per share to $14.95 per share between Wednesday, 28 August 2019 and Friday, 30 August 2019.

Meanwhile, there was no change in the expectations for dividends in other future quarters, but the change in the amount of dividends expected to be paid out from 21 December 2019 and 20 March 2020 may explain much of why investors would appear to have shifted their focus to that particular future quarter, as indicated by the trajectory of the S&P 500 with respect to our dividend futures-based model's projections.

Alternative Futures - S&P 500 - 2019Q3 - Standard Model - Snapshot on 30 Aug 2019

At the same time, the CME Group's FedWatch Tool became a little more myopic in the last week, dropping its early projections for 2020-Q2, making 2020-Q1 the most distant future quarter to which investors paying attention to likely changes in the Federal Reserve's interest rate policies are seeing in their crystal balls.

CME Group FedWatch Tool Probabilities of Federal Funds Rate Changing at Future FOMC Meeting Dates, Snapshot on 30 August 2019

Meanwhile, we think that last week's news headlines don't provide much of an explanation for why stock prices rose during the week that was, but you can judge that impression for yourself:

Monday, 26 August 2019
Tuesday, 27 August 2019
Wednesday, 28 August 2019
Thursday, 29 August 2019
Friday, 30 August 2019

At the Big Picture, Barry Ritholtz identifies seven positives and seven negatives he found in the week's economics and market-related news.

Over the Labor Day holiday weekend, the U.S. and China imposed new tariffs on each other's nations' goods, which will factor into this upcoming week's stock market action. If you were hoping for less noise in in the markets following a lazy long weekend, you'll likely be disappointed.

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