Everyone Is Breathing Out

CHINA CLOSED - It seems with China out on holiday for the remainder of the week, the market is feeling better about itself. The past several days have been a constant worry with China and so, with the country shutting down, everyone is breathing a little better. This could result in some more risk buying into the end of the week, but I don't think these rallies will be anything more than great sell opportunities when fuller conditions resume next week. For the moment, the key focus is on today's ECB rate decision and tomorrow's monthly employment report out of the US. The ECB isn't expected to make any changes to policy and most of the volatility from this event risk will come from what Mr. Draghi has to say about lower oil and risks associated with China.

FED OUTLOOK - With NFPs, we could see a good amount of Friday volatility, but so long as the data comes in close to expectation, I'm not sure it will do anything to influence the Fed's decision making process. Right now, it's clear the Fed is ready to make its first tightening move in quite some time, and the only thing that might prevent it from doing so is another China disruption or intensified liquidation in stock markets. For now, these concerns have abated somewhat and ironically, this is what just might trigger that Fed rate increase, which is not what the markets want. I don't have any trades on at the moment and have been really focused on enjoying these last days of summer with the kids before they go back to school. That picture above was from an outing to the beach this week. Figured my own real life cartoon was worth the departure from the regular cartoons.

Barring a disaster print, NFPs shouldn't have much influence on the Fed timeline. Via @joelkruger

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