September 12, 2014

     DJI declined by 0.36% as investors worried about FOMC meeting on next Tuesday and Wednesday. Even though it is unlikely to increase interest rate at this point of time, the Fed. expects to increase the interest rate sooner rather than later as labor market keeps improving.

The Dow Jones declined 0.64% as the fear of higher interest rate rose. Yet strong economic indicator like high retail sales and industrial production released which bounce the DJI back at the end of the day.

     Increase in retail sales and consumer sentiment mean that consumers are feeling better about economic outlook; economy is more engaged in expansion now. It can be a good news, for now. However, it means that the Fed. is really going to increase the interest rate sooner as it is going to taper the economy.

Unlike U.S., China and EU are experiencing opposite situation.

      China's industrial production declined more than expected this month - the lowest since 2008 financial crisis. Yet the market has a positive responding; its trading volume is high while its price keeps increasing. Investors expect the government to put extra stimulus in the market as the manufacturing sector and housing market slow down.

     If the Fed. decreases the interest rate and U.S. consumer spending is stagnated, China's industrial production will be suffered even more.

     European market declined little bit, but it had a restricted movement. There are too many issues that the investors have to concern at this point. Scotland's independent movement, sanctions on Russia, FOMC meeting and implementation of ECB QE.

     As Russia will propose additional sanctions on EU, DAX declined by 0.41% but other EU companies had a restricted movement. Investors take a wait-and-see attitude rather than taking a movement. ECB changed its attitude on QE recently as Q3 GDP seems to turn positive and deflation risk eased. Yet implementation of QE is still possible as its economy, especially those in Southern Europe are struggling.