Market Lab Report - Premarket Pulse 10/12/15

Published : October 12 2015 at 8:33 ET
Major averages rose Friday on lower volume with the NASDAQ Composite closing just below its 50-day moving average which served as mild resistance. Over in China, the Shanghai market was up 3.29% on plans for additional quantitative easing.

While the global economy is weak, economic reports claim the US is doing better. Nevertheless, the Federal Reserve may deploy negative interest rates should economic conditions worsen over the next year or two to the point of recession, an option that was rejected during the darkest days of the financial crisis post 2008.

“Some of the experiences [in Europe] suggest maybe can we use negative interest rates and the costs aren’t as great as you anticipate,” said William Dudley, the president of the New York Fed.

Indeed, events in Europe over the past few years have shown the benefits outweigh the risks. In Europe, the European Central Bank, the Swiss National Bank and the central banks of Denmark and Sweden have deployed negative rates to some small degree without catastrophe.

So while negative rates would not be a total solution, it would be additional support. Thus the odds of a QE4 of some sort could occur should the weak global economy worsen and push economic growth in the US into recessionary levels.

This information is provided by Virtue of Selfish Investing, LLC (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing, LLC. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2016 Virtue of Selfish Investing, LLC. All rights reserved.