Ameriprise Says Fed Actions This Month Will Do ‘Nothing’ For Asset Prices
The Fed is expected to raise interest rates at the upcoming September Federal Reserve meeting, which could already be priced into the market, according to Ameriprise Chief Market Strategist Anthony Saglimbene.
“In our view, central bank actions this month are inevitable for asset prices,” he wrote in a Monday note. “However, incoming economic data in the coming weeks and months and its influence on policy actions next year could play a more significant role in shaping stock direction over the interim period..”
Markets now expect the Fed to raise rates by 0.75 percent, meaning assets won’t move much if the Fed’s decision. A consumer price index report on Tuesday may not move the needle in line with expectations.”
“We believe a 75 basis point hike from the central bank will be locked in at this point, including Wednesday’s update in the August producer price index (PPI) if inflation figures last month do not change significantly than expected,” he said.
– Carmen Reinicke
Wells Fargo says the relief rally will withstand the market rally
According to Wells Fargo, the recent relief rally in stocks is another bear market bounce and investors should be positioning for more bullishness.
“The performance of year-to-date, defensive, high shareholder payouts, high quality and undervalued stocks reminds investors of the sign of a bear market,” global portfolio and investment strategist Zhao Ma wrote in a note on Monday.
Such recoveries occur in nearly every bear market, and many quickly reverse, much to the chagrin of investors.
“Although it is difficult to predict the bottom of a bear market, in the past, market bottoms were usually preconditioned by more pessimistic market sentiment and signs of firm improvement in an underlying economic or market issue,” Ma said. “In any case we believe we are not there yet.”
Meanwhile, Ma suggests investors look for defensive stocks with low volatility, high dividends and share repurchase yields. He also says that investors should go for high quality names with profitability and leading market share and affordable market prices.
– Carmen Reinicke
US stock futures rise ahead of Tuesday’s CBI report
US stock futures were higher on Monday night as Wall Street is set to release its August consumer price index report on Tuesday morning. The report will provide investors with an update on the inflation situation in the US and is one of the last data the Federal Reserve will see ahead of its September meeting.
Dow Jones Industrial Average futures rose 55 points, or 0.17%. S&P 500 and Nasdaq 100 futures rose 0.18% and 0.21%, respectively.
– Carmen Reinicke
