Lagarde’s “whatever it takes” moment?
The European Central Bank (ECB) added to the optimistic tone of markets last week by exceeding already lofty expectations and expanding their asset purchase program in size, duration, and reinvestment details. Some are calling this ECB President Lagarde’s “whatever it takes” moment and markets are responding accordingly. The Euro is rallying along with EU equities and the very beaten-down EU banks. And spreads on government debt outside of the core are tightening.
It’s worth remembering that when Mario Draghi uttered those famous words in Portugal in 2012, the Euro appreciated by about 15% over the next year and a half — and that was without any help on the fiscal side. Given the EU-wide fiscal package proposed with France’s and Germany’s backing two weeks ago, Europe is now 2 for 2 against years of investor negativity. We think this has legs.
FOMC to release rate decision (spoiler alert)
This week it is the Fed’s turn, with the FOMC releasing their rate decision on Wednesday. Fed Funds rates aren’t moving, but we’ll get a fresh set of economic and interest rate projections and likely stronger forward guidance on interest rates. Spoiler alert: interest rates aren’t going higher anytime soon. It will likely be years, not months, before we see a rate hike.
What to watch now
Outside of the Fed news on Wednesday, it’s a relatively slow week. Here’s what we’ll be watching.
NFIB Small Business Optimism Survey
On Tuesday, the report is expected to show a rebound in May.
Flash Consumer Confidence
On Friday, expect to see the University of Michigan Consumer Sentiment Index flash survey tick higher for June.
We continue to watch high-frequency data, e.g., OpenTable reservations, to confirm reopening momentum and progress.
While the market isn’t hyper-focused on the virus right now, we continue to watch for a plateau in new cases or only a slight increase following the restart and the nationwide protests taking place.
To download a copy of this commentary and the chart of the week, click the button below.
To discuss how we can empower you please contact us at 866.371.2399 ext. 202 or email@example.com.
Nothing contained herein should be construed as an offer to sell or the solicitation of an offer to buy any security. This report does not attempt to examine all the facts and circumstances that may be relevant to any company, industry or security mentioned herein. We are not soliciting any action based on this document. It is for the general information of clients of Horizon Investments, LLC (“Horizon”). This document does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Before acting on any analysis, advice or recommendation in this document, clients should consider whether the security in question is suitable for their particular circumstances and, if necessary, seek professional advice. Investors may realize losses on any investments. It is not possible to invest directly in an index.
Past performance is not a guide to future performance. Future returns are not guaranteed, and a loss of original capital may occur. This commentary is based on public information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such. Opinions expressed herein are our opinions as of the date of this document. We do not intend to and will not endeavor to update the information discussed in this document. No part of this document may be (i) copied, photocopied, or duplicated in any form by any means or (ii) redistributed without Horizon’s prior written consent.
Other disclosure information is available at www.horizoninvestments.com.
Horizon Investments and the Horizon H are registered trademarks of Horizon Investments, LLC
©2020 Horizon Investments LLC