Over the last few days, you’ve heard from us in both the Monday Morning Kickoff and yesterday’s Tematica Investing about the current state of the market. While we could regurgitate all of that, we’re going to trust that you’ve read our insights on the recent Fed flip-flop comments and prospects for the oil industry.

While we don’t hear many connecting these two things, the reality is the slowing global economy is the root cause of lower oil prices and the reason behind not only move lower in the market but also the reason why the Fed will once again hit the “no action” button come September 21. That’s right, in just the past few days, we’ve seen the market finally wake up to the reality that the Fed is not likely to raise interest rates anytime soon.

Of course, we’ve been sharing this prognosis with you over the last several weeks, but sometimes it bears repeating — the summer soft patch in the domestic economy is looking like it will extend itself, and that is causing a recalculation of GDP expectations. As the data has rolled in, we’ve started to see the uber-bullish Atlanta Fed GDPNow reading start to breakdown, and this was the indicator that missed the June quarter GDP reading by a country mile.

Ah, those central bankers and their ever-bullish view on the economy. Let’s face it, folks, they are more akin to cheerleaders than to those of us that are investing and trading.

If we pull back our market lens a bit, it appears we are once again seeing the lines cross between what the Fed may do, and what the tone of the economy may mean for earnings. The latest quarterly Business Roundtable CEO Economic Outlook Index, which is a composite of CEO projections for sales and plans for capital spending and hiring over the next six months, was published yesterday. The index fell to 69.6 for the current quarter, down from 73.5 in the June quarter. Digging into the survey findings, we see that CEO expectations for sales over the next six months are down by 9.3 points, while expectations for hiring declined by 3.4 points from last quarter.

Not the vector one would associate with an economy that is humming along.

What this likely means is investor expectations — for both economic growth and earnings expectations — will come under the microscope. We’ve been vocal that overly exuberant second half 2016 expectations are likely to be revised lower, and yes, we are starting to see that. While we would like to pat ourselves on the back, the reality is we have yet to see more than a few individual companies ratchet back December quarter earnings. With the end of the September quarter roughly two weeks away, based on the data we’ve gotten in recent weeks, it’s looking like guidance for the coming quarter is bound to disappoint.

One might think this would have us put a bearish trade or two on. Odds are we would, if the volatility in the market hadn’t skyrocketed from such complacent levels. That pick up has led to wild swings over the last few days. Rather than get stopped out on a new call option recommendation, we’d rather sit on the sidelines until the market enters calmer waters. We’ll take a nod from Kenny Rogers in his often quoted The Gambler — but instead of “knowing when to hold ‘me, fold ‘me or walk away”, we’ll sit on the sidelines with ample cash in hand, waiting for the right time to trade a new position.

Later today the Federal Reserve will share its August Industrial Production report, and given US heat maps over the last few weeks, we suspect utility production will once again climb month over month. While we may have been sweat-stained at the time, that’s good new for the Utilities Select Sector (XLU) October $51 calls we added last week and scaled into last Friday. With unseasonably warm weather persisting into September, we continue to have a Buy on that call option.

Housekeeping Item

While we sent out a mea culpa last week, we wanted to make sure that everyone saw that we fat-fingered the United Parcel Service call option trade last week. Chalk it up to coming back from vacation, but we’d rather own up to our mistake than try to smooth it over with some fast talk and pivot to a conference that we’re putting on. As we see it, it’s an honor for us to help you with your finances and much like the hypocritical oath, the first charge is to do no harm. In the coming weeks, we’ll be double checking the links and related items to ensure we are SNAFU free.

To the subscriber who alerted us to the issue, all we can say is thank you and at the first Tematica get together your drinks are on us.