(News Bulletin 247) – The Nasdaq Composite index contracted yesterday by 0.89% to 10,890 points, in a market which “temporaries” before the outcome this Wednesday, of a Monetary Policy Committee of the Fed ( FOMC). If the scenario of an increase in Fed Funds of 75 basis points is in any case almost certain, it is the elements of language at the press conference that will be scrutinized, to see how the Fed is positioning itself, in particular compared to the latest PCE (consumer price) publications at the end last week, and new job postings (JOLTS) yesterday.
These new job openings (Job Openings and Labor Turnover Survey) came out at 10.720 million, above expectations for the month of September. A first indication of the tensions on American employment this week before the publication of the ADP survey, at the moment, of the weekly registrations for unemployment benefits on Thursday and of the monthly federal NFP report on Friday. The survey by the private firm in human resources ADP has just quantified the number of new job creations in the private sector (excluding agriculture) at 239,000, well beyond the consensus.
“Last week, markets were buoyed by expectations of a ‘pivot’ in central bank monetary policy, or at least a deceleration in the rate of interest rate hikes,” note strategists at Muzinich & Co.
But these clear signs of tensions on the labor market front, combined with the chronic firmness of PCE prices, published on Friday, argue for a deliberately hawkish for the next few months.
For Franck Diximier (Global CIO Gestion de Rates Allianz GI), the Fed will “stay the course”, that is to say that of an offensive monetary policy, with the aim of avoiding entry into a diabolical price/wage loop. “The Fed has no choice but to focus on its primary mandate of price stability and to continue to act quickly and strongly”, for the asset manager.
“The Fed is sticking to the logic inaugurated at its meeting in June, with a higher than expected rate hike: it is a question of carrying out as many rate hikes as possible over the next few months before the window of opportunity is closing. Because the risk of recession, or at least that of a sharp deceleration in growth from the end of the year, is now anticipated by the markets. The Fed must therefore act now, in order to continue to anchor the inflation expectations and restore room for manoeuvre.
Reminder of today’s monetary meetings: monetary policy decisions themselves at 7:00 p.m. and the press conference at 7:30 p.m..
KEY GRAPHIC ELEMENTS
The flagship index of technology stocks of the American dimension traced, on the amplitude of the body of the candle of the day before, a candle in doji tombstone, which illustrates the breathlessness of the reaction started on 13/11. This candle was confirmed the next day by a marubozu elongated, graphic illustration of a continuous mobilization of the sales camp. Friday’s session did not allow the weekly highs to be exceeded, and the harami of Monday is perplexing, especially since it was completed by a bullish engulfing, clear, certainly without transcendent volumes.
FORECAST
Considering the key chart factors we have mentioned, our opinion is negative on the Nasdaq Composite index in the short term.
This bearish scenario is valid as long as the Nasdaq Composite index is trading below the resistance at 11250.00 points.
CHART IN DAILY DATA
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