FOMC outlook: Fed hike outlook dim, Brazil diving into chaos, Do china stock swings matter?

With markets awaiting the crucial FOMC meeting, Marc Ostwald, Strategist at ADM investor services, lists the two key elements the markets should be keeping an eye on from the Fed meet, and further he comments on Brazil’s diving economy, and the Chinese economy.

FOMC meeting: Eyes on Williams and Lacker’s stance

With the Greece and China fiasco, Ostwald believes that focus should be on how the fed describes the risks to the US economy. He further mentions that any dissent by Fed members Williams and Lacker might also be the key view from the FOMC meeting, as both the members have been rooting for rate hike in the US this year. Any divergence seen by them will further add uncertainty to the US rate hike outlook.

Fed should be thinking about a September rate hike, as December won’t be a likely lift-off date. Markets are pricing in a 50% chance of a September rate hike, according to Ostwald.

Brazil: Disintegrating into chaos

Ostwald notes the negative outlook by S&P on the Brazilian economy sends a further negative message, another downgrade might see Brazil falling into junk category. Watch how Ostwald explains the key problems of the economy and why Brazil will disintegrate into chaos with a negative effect.

China: Do the stock market swings matter for the economy?

China is a farce market, and sees a rocky ride ahead. The authorities will keep on intervening, but relating the stock market slump to the economy isn’t justified, according to Ostwald. He explains that since the economy didn’t benefit after the equity market bullish climb, the fall doesn’t necessarily bode bad for the economy; but concerns for the economy remain. Markets will be choppy ahead but a massive collapse in Chinese growth for a protracted period isn’t expected.