Here is a list of what I think is important this week.
- Treasury yields have moved back up a little over the last couple of weeks as expected. I believe the hurricane reaction is now of the bond market. Bonds are back to worrying about the Fed as a priority and to a lesser extent what 2006 will look like.
- There have been a few earnings warnings so far but we do not have a good feel yet for what the hurricanes will mean for stocks yet. I expect this to be more visible in the fourth quarter.
- I view the action in equities as favorable, short term. There is not a lot of selling pressure with what is known now.
- With the S+P 500 up 0.4% for the year I continue to believe that there will be a positive move as managers try to salvage the year.
- The energy market has not unwound from the hurricanes. As someone who has been bullish on oil for a couple of years, I am surprised that it is not closer to $60 right now. Given the amount of refineries shut down it makes sense to me that gasoline is still very high.
- The market seems to be pricing in a higher likelihood of 4.25% in Fed Funds. There is concern about the real estate market. I thought they should have stopped at 3.5%, I think a few months of $3.00 gasoline will make them wish they had.