The key talking points in the market remain unchanged this morning. First and foremost, there is the question of whether or not Ms. Yellen's merry band of central bankers is going to lose their "patience" this week and change the wording of the FOMC statement. It is widely expected that the word "patient" will come out of the statement accompanying the Fed's rate decision on Wednesday. And as we've been told, the removal of the word patience means that the Fed can start hiking rates at any time. Currently, the stock market is conflicted as to when the first rate hike will occur (June vs. September) and the thinking is that bad (economic) news as good news as it relates to the question.
Next up is the issue of the dollar and oil. While joined at the hip the vast majority of the time, the resumption of the dive in crude prices appears to have more to do with Iran than the greenback. The key here is the issue of economic sanctions on Iran being lifted. On the subject, Iran’s oil minister said Monday that if sanctions were lifted, his country could boost exports by 1 million barrels per day within several months. As such, the fundamental issue of supply is clearly back on the table here.
Finally, there is the issue of earnings expectations. The bottom line here is that the furious rise in the U.S. dollar will undoubtedly impact earnings of multinational companies. Analysts have been cutting expectations for the upcoming earnings season and as a result, the outlook for the current quarter isn't pretty. Therefore, traders will need to listen closely to company commentary when the earnings parade begins again in the next few weeks.
Current Market Outlook
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