Chris Ciovacco

About the Author Chris Ciovacco

Chris Ciovacco is the founder and CEO of Ciovacco Capital Management (CCM), an independent money management firm serving individual investors nationwide. The thoroughly researched and backtested CCM Market Model answers these important questions: (1) How much should we allocate to risk assets?, (2) How much should we allocate to conservative assets?, (3) What are the most attractive risk assets?, and (4) What are the most attractive conservative assets? Chris is an expert in identifying the best ETFs from a wide variety of asset classes, including stocks, bonds, commodities, and precious metals. The CCM Market Model compares over 130 different ETFs to identify the most attractive risk-reward opportunities. Chris graduated summa cum laude from The Georgia Institute of Technology with a co-operative degree in Industrial and Systems Engineering. Prior to founding Ciovacco Capital Management in 1999, Mr. Ciovacco worked as a Financial Advisor for Morgan Stanley in Atlanta for five years earning a strong reputation for his independent research and high integrity. While at Georgia Tech, he gained valuable experience working as a co-op for IBM (1985-1990). During his time with Morgan Stanley, Chris received extensive training which included extended stays in NYC at the World Trade Center. His areas of expertise include technical analysis and market model development. CCM’s popular weekly technical analysis videos on YouTube have been viewed over 700,000 times. Chris’ years of experience and research led to the creation of the thoroughly backtested CCM Market Model, which serves as the foundation for the management of separate accounts for individuals and businesses.

Here Are The Major Fed Scenarios Ahead of September 17’s Meeting

This week all eyes and ears will be focused on the Federal Reserve’s policy statement to be released at 2:00 pm ET Thursday. The Fed has three major paths they can take, with various permutations and combinations flowing off the base scenarios:

  1. No change to interest rates, but a much more hawkish statement hinting “we are raising rates before the end of the year. It is coming, so get ready”.
  2. A small increase in interest rates accompanied by a “we plan to move very, very slowly going forward” statement.
  3. No change in rates and no significant change to the “it is data dependent” statement.

Which Way Is The Market Leaning?

Markets make decisions based on the data in hand and based on future expectations. Obviously, the Fed can change the data in hand, which in turn can change expectations. Having said that, what is the market’s current read heading into the Fed decision? For the answer, we review numerous risk-on vs. risk-off ratios in this week’s stock market video. The charts speak for themselves.Video

Why The Fed Will Not Wait Indefinitely

Whether or not the Fed hikes this week probably falls into coin-toss territory. At first blush, it seems reasonable to ask “what is the big hurry?”. The Fed’s concern is not about current inflation, but rather future inflation. From Bloomberg:

Fischer, whom Fed Chair Janet Yellen has said she relies on in mapping out policy, made a similar point much more recently. “There is always uncertainty and we just have to recognize it,” he told CNBC television on Aug. 28. Asked if the Fed should delay an increase until it had an “unimpeachable case” that a move was warranted, Fischer replied, “If you wait that long, you will be waiting too long.” Fischer made much the same point at Stanford University on March 14, 2014. “We tend to underestimate the lags in receiving information and the lags with which policy decisions affect the economy,” he said in a speech, titled Lessons from Crises, 1985-2014. “Those lags led me to try to make decisions as early as possible, even if that meant there was more uncertainty about the correctness of the decision than would have been appropriate had the lags been absent,” he added.

Investment Implications – The Weight Of The Evidence

What flavor of statement will come across the wires Thursday afternoon? More importantly, how will the market react to the statement? The number of statement and reaction combinations is almost infinite. Therefore, our approach will be to monitor and adjust if needed, rather than anticipate and hope.

The facts in hand are not attractive from a risk vs. reward perspective. The markets can begin to improve at any time. However, we need to see meaningful improvement; something that has not happened yet. We will maintain a defensive posture; respecting things can evolve quickly once the Fed has made their intentions known.

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