Stocks pulled back on weak volume as the Dow fell 33 points to close at 18,447. The NASDAQ posted its first two day drop in over 2 months. The weak volume was an indicator that institutional investors were not big sellers.
The Jackson Hole Central Banker Symposium (JHCBS) is drawing all the attention this week as the gurus speculate on what Fed Chair Janet Yellen will say in her speech on Friday. Will she indicate a rate hike or not is the question on the lips of market watchers. At the moment the CME Fed Watch tool is projecting a single rate hike through July 2017 with just a 23% chance of a second rate hike at the July 26, 2017 policy meeting.
Last night on the telly, Shark tank member and investor Kevin O’Leary said that investing in Europe was” a good thing” because of cheap prices for well established companies. While he could be right it is wise to consider other opinions on the matter. Take for example John Cryan who is the CEO of Deutsche Bank. John warned of “fatal consequences” should the European Central Bank continue to push negative interest rates. The ECB is holding its deposit rate at -0.4% which is pressuring banks and insurance companies in the region. While Kevin did say to avoid European banks it is important to know that these banks also own shares of non-financial companies within the eurozone and should there be a forced sale sparked by an Italian bank crisis or some other event then markets in the region could get cheaper still.
Oil prices today rallied on a weaker dollar and more chatter from the Middle East about production limits. WTI crude closed the day up 1.2% to $47.30 per barrel. Gold continued to show weakness and traded near a 4 week low at $1,325 an ounce.