The CME Group is now forecasting a 71.5% chance that the Fed will raise interest rates in December, but beyond that, the algorithm is mixed.
Capital Economics’ view of the U.S. economy parallels that of Phil Orlando, chief equity strategist at Federated Investors. Even as the Dow Jones Industrial Average declined as low as 507 points on Monday and financial news outlets are communicating that investors are no longer buying the dips in the stock market, others remained positive on the real economy.
“You look at the economic sign posts that we’ve been focusing on the past couple of weeks–the (Jerome) Powell lunch in New York–we got what we wanted out of that (which is) the Fed is close to neutral,” said Orlando. “The G-20 dinner between Trump and Xi–we got exactly what we wanted there–they suspended the tariffs for three months and now they’ll have a chance to work out the details.”
In Orlando’s view, combine those events with the recent OPEC decision to reduce oil production and the forthcoming rate decision later this month by the Fed, and the stock market should respond positively.
“The fundamentals suggest that we should be grinding back up to the old highs,” said Orlando.
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