Good Morning,
I hope everyone had a great Labor Day weekend and is feeling refreshed and reenergized.
Markets are under pressure this morning as renewed escalation in the Middle East is pushing oil prices back toward $100 per barrel and driving yields higher. Inflation and Federal Reserve policy remained front and center last week, with expectations for a September rate hike fluctuating throughout the week before culminating in a much stronger than expected August jobs report.
The employment data strengthened the case for a September rate hike, with the Fed's decision scheduled for September 16th. Attention now turns to this Friday's CPI (inflation) report, which is expected to be the key catalyst influencing next Wednesday's Fed decision.
Fundamentally, second quarter earnings season will wrap up this week and has largely exceeded expectations. While there has been considerable market noise lately, the most important catalyst, in my opinion, remains the price of oil.
The consumer has remained resilient; however, elevated gas prices will eventually affect corporate margins and consumer spending, especially with the holiday shopping season just around the corner.
Market participation has continued to broaden, and I remain optimistic, with a preference towards value.
As always, please feel free to reach out with any questions or comments.
Attached is this week's Market Strategy Radar Screen Report from John Stoltzfus, Chief Investment Strategist at Oppenheimer Asset Management.
Have a great rest of the week!