Market Recon Monday

Good Morning,
                     There is very little to look at today in the way of macro-economic data, or quarterly earnings releases. The rest of the week will, however be more interesting.  Earnings season may generally be over, but we’ll still have a few significant releases this week starting tomorrow.  As for the macro, you’ll see important housing numbers for July, the monthly report on Durable Goods Orders, and a revision to Q2 GDP, but the focus will undoubtedly be on the Federal Reserve Bank gathering to be held later this week in Jackson Hole, Wyoming. More specifically, the focus will be on Fed Chair Janet Yellen’s speech this Friday.
                     Janet Yellen’s speech is titled “The Federal Reserve’s Monetary Policy Toolkit”.  The title is vague enough, and in my opinion, the speech will be vague enough to allow the FOMC the wiggle room it would need in order to do whatever it needs to do after another Non-Farm Payroll number rolls in….and not lose even more credibility. The Vice Chair, Stanley Fischer spoke yesterday from Aspen, and he played the roll of the canary in the coal mine ahead of this Jackson Hole symposium.  The Vice Chair was clear that in his view, the economy is close to the Fed’s targets on employment and inflation. He indicated an awareness that growth and productivity are lagging, but that in his view, the second half of the year will be stronger than the first, and that productivity is something that monetary policy has little impact on. There are two key take-aways from the Vice Chair’s speech less than a week ahead of a very high profile speech to made by the Chair.
1) The Vice Chair seems open to a rate hike in 2016. Without mentioning September specifically, Fischer sounded as if he was making an argument for a hike sooner rather than later.
2) It is extremely unlikely that the Vice Chair would go public in somewhat hawkish fashion without the Chair’s knowledge. Most likely, in my opinion, he was sent ahead as a scout.  If an ambush awaits, either in the marketplace, or in the media, she would then be well aware of what she was up against.
                   Before I go, Crude is in the spotlight again today. WTI is off more than 2% this morning. There are a number of reasons. The ever increasing US rig count that represents more domestic production, and a stronger US dollar versus most of it’s competitors are primary, but the media always forgets about profit taking. You’ve just witnessed a dramatic two week move in this space, and the trader instinct is to protect found money. You’ll notice that the Energy Sector, on Friday was ahead of the commodity on this move.