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Weekly Market Outlook – 5/06/16

Weekly Market Outlook – 5/06/16

The jobs numbers on Friday provided a brutal reminder to a variety of important factions including the government, the U.S. public, and investors that wishful thinking is not enough to improve the economy in the States. The Fed The Federal Reserve The Federal Reserve is the Central Bank of the United States of America and sets the monetary policy When used by traders and investors monetary policy When used by traders and investors monetary policy When used by traders and investors monetary policy usually refers to Central Bank policy concerning ... More usually refers to Central Bank policy concerning ... More usually refers to Central Bank policy concerning ... More ... More is the Central Bank of the United States of America and sets the monetary policy... More has been put into a spectacularly difficult position – by their own doing – regarding their monetary policy.  The Fed’s objective of raising interest rates back to ‘normal’ levels which it has addressed for a year and was never really implemented will be truly put to the test. The Fed The Federal Reserve is the Central Bank of the United States of America and sets the monetary policy... More is in the proverbial hot seat at this juncture.

The Non-Farm Employment Change results on Friday showed that there was a severe shortage of new jobs added. While the official Unemployment Rate did improve, these numbers showed that a large segment of the U.S. population unfortunately continues to ‘leave the workforce’ because they have been unemployed too long and no longer register as job seekers.  A poor economy will be a major issue during this election season and continue to help the candidates who are perceived as ‘outsiders’.

Janet Yellen will speak Monday about the economy in Philadelphia and it will be an opportunity to address the shortcomings. However, Yellen will certainly not blame herself or the Federal Reserve The Federal Reserve The Federal Reserve is the Central Bank of the United States of America and sets the monetary policy... More is the Central Bank of the United States of America and sets the monetary policy... More for the results and short comings of the American economy, although many others will.  Simply put the Fed should have raised rates much quicker last year, but instead they choose to be cautious and now they will be put in the hot seat because instead of improving like the Fed projected, the American economy in fact has gotten worse. So what does the Fed do now?

Traders promptly punished the USD The USD The USD is the official currency of the United States of America. It is the largest reserve currency... More is the official currency of the United States of America. It is the largest reserve currency... More on Friday when the results from the jobs numbers were published. The USD took a direct punch to the nose from other FX majors. The EUR The EUR The EUR is the official currency of the European Union. Presently 19 out of the 28 collective  nati... More is the official currency of the European Union. Presently 19 out of the 28 collective  nati... More and GBP The GBP The GBP is the official currency of the United Kingdom. The GBP is a major currency and currently ra... More is the official currency of the United Kingdom. The GBP is a major currency and currently ra... More quickly gained momentum and held onto their gains going into the weekend, thus setting up a very interesting week for trading in the coming days.

German Factory Orders will be released on Monday, besides Yellen speaking in the States later. On Tuesday the Revised GDP results will come from Europe and the U.S. will release Revised Non-Farm Productivity data. On Wednesday GDP statistics will come from Japan, the U.K. will print Manufacturing Production figures and the States will issue Crude Oil Inventories storage numbers. Thursday will have weekly Unemployment Claims and Friday will see the Prelim University of Michigan’s Consumer Sentiment reading.

Essentially trading sentiment this coming week will be mostly USD centric and ruminate about the Fed and what it will say in the coming weeks. An interest rate hike for June is all but dead at this point unless the Fed wants to play a wicked form of Russian roulette with the U.S. economy. Wall Street will remain cautious and could provide fireworks because investors will be weary of these bad economic signs. Tomorrow’s speech by Janet Yellen will get a lot of attention because she will set the stage for how this drama will be acted out by the Federal Reserve for the next few months. As the ‘Actor in Chief’ for the Federal Reserve Janet Yellen now has an extremely tough task ahead and her audience awaits.