The market this week opened with a risk-on tone as several members of President Donald Trump’s cabinet stressed that diplomacy will be the preferred solution to threats from North Korea, Prudential’s Chief Market Strategist Quincy Krosby said Monday in her weekly “Connecting the Dots” outlook.
Safe-haven investments such as gold and Treasuries have given up some of the gains made last week as rhetoric between the two countries intensified, Krosby said. Still, investors are focused on headlines resonating from North Korea and the White House.
“The market, nonetheless, will continue to be sensitive to threats and/or action stemming from the North Korea crisis,” she said.
Also this week, an important package of data releases on retail sales, housing and industrial production will give an indication of the strength of the economy, Krosby said. On Tuesday, retail sales results for July and the Empire State Manufacturing Survey are due; on Wednesday, housing starts; and on Thursday, industrial production, the Index of Leading Economic Indicators and the Philadelphia Fed Business Outlook Survey will be released.
Also Tuesday, minutes from the July 26 Federal Reserve Open Market Committee meeting will be released. Since there was no press conference then, analysts will be reviewing them closely for any additional information about the rollback of the Fed’s balance sheet, which presumably will begin in September, and the outlook for the rate-hike trajectory for the remainder of 2017, she said.
“They will be scoured for information regarding the rollback of the Fed’s balance sheet and any indication of the Fed’s plans for another rate hike this year, which the market currently assesses at less than 40 percent,” Krosby said.
Lastly, the earnings season winds down with big retailers reporting this week, including The Home Depot, Inc., on Tuesday; Target Corp. on Wednesday; and Wal-Mart Stores Inc. on Thursday.
To talk to Quincy Krosby about her views of the market, contact Lisa M. Bennett or Dara Scerbo.
Read Quincy Krosby’s full Q3 Market Commentary: Third Quarter Checkup.
The views and opinions are those of the author at the time of publication and are subject to change at any time due to market or economic conditions. This is solely for informational purposes. This is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.