The bottom line
The recovery continues with modest forward momentum. International trade is expanding but at a slower pace than some months ago. The consumer sector is still positive but also less robust than earlier in the recovery. Inflation is not a threat except at the dinner table. The Fed still has plenty of room to maneuver but many on the FOMC are skeptical, doubting that additional policy moves would do much good and, in the worst case, would create inflation risks down the road.
Looking Ahead
Week of July 16 through 20
Investors will be on heightened alert given the many market movers slated to hit the wires. The updates include consumer, housing and production data including retail sales, housing starts and existing home sales. Regional manufacturing data from the Empire State and Philadelphia Fed plus national industrial output data will update the manufacturing outlook. Additional hints—or not—on QE3 could come via the Fed’s Beige Book on Wednesday.
We are traders and masters of risk. When you become pro you stop over analysing and all you do is sit there, and wait, and wait, and wait some more until you find the perfect trade. What I am saying is that the market makes all the decisions. Our only decision is to listen, feel, and respond to the market’s siren. Always and without exception. Remember, the market never lies. It is only we who lie to ourselves.
