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Powell Next Federal Reserve Chair?


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November 2, 2017

STOCK INDEX FUTURES

S&P, Dow and NASDAQ futures registered new record highs yesterday.

Yesterday the Federal Open Market Committee voted unanimously to leave its benchmark interest rate unchanged in a range between 1.00% and 1.25%.

The statement appeared to be neutral on balance with Fed officials expecting the economy to expand at a moderate pace with risks to the economic outlook roughly balanced. Also, the Fed anticipates the labor market will continue to strengthen, along with gradual increases in the fed funds rate.

Initial U.S. jobless claims in the week ended October 28 fell 5,000 to a seasonally adjusted 229,000. The median estimate called for initial claims to be 235,000.

The computer models that I use continue to generate bullish signals for stock index futures.

The main trend for stock index futures is higher.

CURRENCY FUTURES

The Bank of England raised its benchmark interest rate for the first time in a decade, lifting its key interest rate from a record low by 25 basis points to 50 basis points.

In spite of the rate hike, which was widely expected and is normally bullish for the pound, the British pound traded sharply lower when the Bank of England signaled only two more rate increases are likely through the end of 2020.

The Canadian dollar and the Australian dollar are higher in spite of lower crude oil prices.

INTEREST RATE MARKET FUTURES

Futures are higher due to the bullish Bank of England policy statement.

Traders continue to focus on who will be the next Federal Reserve chair. Currently it looks like Fed Governor Jerome Powell is the frontrunner.

Powell has broadly supported Fed Chair Yellens monetary policies and has shared her concern that low inflation levels justify continuing with a cautious approach to increasing interest rates.

President Trump is expected to announce his decision at 2:00 central time, according to his public schedule.

New York Federal Reserve Bank President William Dudley will speak at 11:20 and Atlanta Federal Reserve Bank President Raphael Bostic will speak at 5:15.

According to financial futures markets, the probability that the Federal Open Market Committee will increase its fed funds rate at the December 13 meeting is 98%, which is unchanged from yesterday.

SUPPORT AND RESISTANCE

December 17 S&P 500

Support 2561.00 Resistance 2582.00

December 17 U.S. Dollar Index

Support 94.250 Resistance 94.760

December 17 Euro Currency

Support 1.16310 Resistance 1.17110

December 17 Japanese Yen

Support .87640 Resistance .88190

December 17 Canadian Dollar

Support .77550 Resistance .78130

December 17 Australian Dollar

Support .7655 Resistance .7736

December 17 Thirty Year Treasury Bonds

Support 152^16 Resistance 153^16

December 17 Gold

Support 1268.0Resistance 1286.0

December 17 Copper

Support 3.1100 Resistance 3.1850

December 17 Crude Oil

Support 53.88 Resistance 55.03

For more information about these markets, please contact Alan at 312.242.7911 or via email at alan.bush@admis.com. Thank you.

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Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The risk of loss in trading futures and options can be substantial. The views and opinions expressed in this letter are those of the author and do not reflect the views of ADM Investor Services, Inc. or its staff. Research analyst does not currently maintain positions in the commodities specified within this report. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.



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About the author


Alan Bush has been a commodity analyst since 1976 focusing on the fundamental and technical aspects of stock index, interest rate and foreign currency markets. He has authored several articles for Stocks Futures and Options magazine and produced the “Futures Tech Focus” program, which is a technically based market outlook.

Alan served on the faculty of Oakton College as instructor of a course entitled, “Principles of Technical Analysis.” He has been interviewed on many national television programs, appearing on the Nightly Business Report, CNBC, CNN Moneyline, Reuters Television and Web FN. In addition, he has been frequently quoted in The Wall Street Journal, USA Today, The Bond Buyer and the Chicago Tribune and has been regularly interviewed on Chicago’s WMAQ radio business reports.

Alan can be reached at (312) 242-7911, or via email at alan.bush@admis.com.

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