Starting from August 31st, the stock market shows an ambiguous direction, and September's start is very unclear.
The stock market cannot determine whether to go up or down, and continues only as a market that holds steady somewhat through large corporations' share buyback effects.
September is inevitably an ambiguous month because
There are no consecutive earnings announcements until mid-September, and apart from CPI and unemployment data releases, no events are scheduled.
Additionally, the recent Jackson Hole meeting was a time to reconfirm Kevin Warsh's tendencies, and the market is even more uncertain about its direction. If CPI indicators are bad, interest rates will be raised, right? This is all we can predict at this point.
Kevin Warsh said he would absolutely not do QE (quantitative easing) according to his nature, and through hyperscalers' CAPEX investments and AI's productivity revolution, a task force will be formed to distinguish whether an "asset price bubble" occurs and whether price fluctuations from this provide downward pressure, as stated.
In the PCE inflation index, the fact that 54% of 199 items showed year-over-year increases of 3% or more was presented as evidence that inflation is rising, so if indicators remain poor, it indirectly indicates "we will raise interest rates."
Composing a task force and saying they will monitor what direction AI's productivity revolution gives to prices is an indirect expression of the Federal Reserve's independence to make its own judgment while withstanding Trump's pressure for interest rate cuts.
Due to this ambiguity in America's policy direction, I believe foreign investors have taken positions to capture short-term profits. Literally, a position to engage in short-term trading has emerged.
Since there are still many Q3 earnings announcements ahead, using the supply and demand from large corporations' share buybacks, the purpose of realizing short-term profits appears stronger.
Today, foreign investors sold spot stocks early but, thanks to the gradually rising index, have been buying spot stocks bit by bit while realizing profits on futures they had bought at lower levels. Now, as they sell some futures and then buy futures again to push the index up, they will sell spot stocks. Foreign investors' current position is simply buy-sell-buy-sell. They are not seeing big ups or big downs; they simply appear to be focused on short-term profits.
In the absence of upward or downward momentum, the domestic market is experiencing rotational trading, and there is a favorable wind in the battery sector, which is hot with ESS these days. Samsung SDI has taken on the characteristics of a bellwether stock, where the sector rises when SDI rises and falls when SDI falls.
However, market breadth is somewhat unstable, and except for semiconductors and batteries, everything appears to be in decline. Yesterday the market was semiconductors flat with everything else rising, but today shows signs of retracement of yesterday's gains.
Before the FOMC rate announcement, there is a high likelihood of a very dull market continuing. Currently, there are no news or momentum, and there is a high likelihood of seeing the movements of foreign investors and institutions focused on short-term trading.
The double buyback Treasury purchases announced by Bessent have not yet started, and purchases will begin after September 6th, so we need to watch the movements then
Whether dollar weakness proceeds
Whether long-term bond yields decline (short-term bonds may rise)
Whether the rise of gold and crypto assets continues
We need to observe.
Recently, crypto has risen slightly but gold has declined somewhat, and as oil prices rose, signs of continued dollar strength appeared, which immediately showed gold declining.
Oil prices due to Iran issues could become an issue, and while long-term bond yields were noted due to recent weakness in tech stocks, even after exceeding 4.7% yesterday, the market is not reacting much. It seems to be a sentiment of "let's watch what direction it goes after the September 6th buyback."
September will consolidate support with a brief consolidation, and starting with Micron's Q3 earnings announcement on September 30th, I hope for a full rally to continue into October and November.
