September 22, 2021
Good morning,
Yesterday’s market action continued to look like a correction instead of something worse. However, this correction does not seem to appear in the rear view mirror yet. All eyes will be on the Fed and its Fed statement today – will they add “international risks” without naming China as a risk factor now? Will they acknowledge that a formal announcement on tapering will follow this year? The 2024 dot-plot should be revealed today.
Yesterday’s equity market action was a no-progress affair for bulls and bears with little change in the indexes on the day. This morning’s action, ahead of the Fed release, may not matter either.
Then there’s tomorrow, it will be crunch time for holders of dollar bonds with Evergrande in China. Will it be a sell the rumor/buy the news event or another reason for risk aversion (I lean toward the former, the market doesn’t usually react more than once to the same news).
At any rate, the VIX remains elevated above 20 – not a crisis level, but more of an ongoing correction level. As the first correction, history leans toward favorable market resolution on the other side. See you tomorrow.
Be well,
Mike