September 11, 2014

DJI decreased by 0.12% today. Notice trade volume was not high. The FOMC meeting will be held on Sep. 16-17. The Fed. will decide whether it will increase the interest sooner and ease the quantitative easing based on fast economy is recovering.

Notice that Initial Jobless Claim increased to 315K this week, but it is still on the 300K level, which indicates that labor market is in the good shape. It is unlike that the Fed. will increase the interest at this moment even though labor market is improving and consumer confidence records the highest in more than five years, which increase consumers pending that takes 70% of U.S. GDP.

What Fed. is worried is that increase in interest rate may have a huge impact on the market price. The Fed. actually said that it is worried about how investors are dependent on the Fed., and it will work to decrease their dependency by decreasing QE before adjusting interest rate.

So, it is likely that the Fed. will ease the QE in the upcoming meeting. For now, the market will stay stable until the Fed. will make a such movement.

Independent movement from Scotland is swinging U.K. market. Even though it is unlikely to be happened, its risk restricts the market movement. A news that there is a possibility to extend airstrike against IS to Syria, which opposed by Russia, affected the market.

Yet the Gold price continuously decreases as the tension in Ukraine eased. Even though Russia and EU are about to submit new sanctions against each other, the possibility of increasing interest rate affects the gold price and eventually decrease its price. Notice that price has decreased after end of August, where investors started to worry about increased interest rate sooner than they expected.

 Nikkei is still increasing despite Japan's poor performance in Q2 and bad economic indicators that suggest consumer spending is not rebounding. It is because the market expects BOJ to add more stimulus, about $47 billion, for next tax bump to get out of decade-long stagnation while growing economy.
Yet, like what I wrote in previous article, the problem of the consumer spending is low payroll, which came from holding high cash holdings in major companies. As long as its labor market doesn't improve, additional stimulus may not work as the BOJ expected.