The economic calendar is modest with a focus on monetary policy. Minutes from the last FOMC meeting, Congressional testimony by Fed Chair Powell, more inflation data, and continuing discussion of Friday’s employment report all put the Fed in focus. In addition, President Trump has identified interest rates and Fed policy the “most important problem” facing the nation. Pundits and financial media will follow that lead, raising the question:

Who is really running the Fed?

Last Week Recap

In last week’s installment of WTWA, I predicted that the improvement in the US/China trade debate would spark an initial rally, only to be met by objections. As the rally faded on Monday, you could check off each of the viewpoints I said we would hear. As the week progressed, the emphasis on spinning held true. The employment report looked like pretty good news to almost everyone, but the initial market reaction was negative.

Mike Williams colorfully captured the early action.

Mike’s take?

Now, what’s especially disturbing about this is pretty basic:

Last month, when the jobs report was a “paltry” reading, another batch of experts espoused that most assuredly the Fed needed to be quick to adjust their thinking…and of course, they paraded out all the past times when Fed upticks led to terrible recessions – for the last 473 years.

In other words – low jobs growth is bad – and high jobs growth is bad.

The inimitable Eddy Elfenbein nailed the action with this quip:

The good news is bad news because the previous bad news was seen as an impetus for good news but now that bad news is no longer tenable which is good news and that’s, as I said before, bad news.

All things considered, it was one of my better weeks for both the market action and the commentary.

The Story in One Chart

I always start my personal review of the week by looking at a great chart. This week I am featuring Investing.com’s chart of S&P futures. This allows us to see the reaction to news when the market was closed. The “N” notations represent news events, which you can identify if you check out the interactive version at the site.

The market posted a quiet, 1.7% gain for the week. The trading range was only 1.5%, smaller than the gain because I do not include the prior week’s close in the range calculation – only prices occurring during the week. My weekly Quant Corner translates this into a volatility calculation which you can compare both to VIX and to past readings.