Hold on Tight... Fed Day Could Bring a Number of Changes Sep 17, 2014 08:23AM

The FOMC wraps up its 2-day meeting today and is expected to deliver its policy statement at 2PM ET. The meeting and subsequent press conference is considered very important by market watchers as the Fed is expected to make a number of changes which could have widespread ramifications on asset prices.

Economists at Nomura expect to receive another round of FOMC forecasts for the first time since June, which they say will incorporate significant new data. The forecasts should also be extended to 2017, thus giving a better sense of how the participants judge the current balance between actual and potential output.

They also expect the Fed to make changes to its forward guidance. "At a minimum, we expect the FOMC to add language that stresses the “data dependence” of future interest rate decisions," they said. They expect the FOMC will continue to state that the adjustment of interest rates, when it comes, will be “balanced” and that it expects interest rates to converge to normal levels more slowly than employment and inflation. However, "in the light of the sustained improvement in labour market performance, and the inherent complexities in assessing their state, we expect the FOMC to drop its assessment that “lift-off” is still a “considerable time” away."

Nomura said these change reflect the progress of the US recovery. The changes are also easier to make because the current state of financial markets - stable long-term interest rates and resilient financial conditions - gives the FOMC some comfort that it can take another step towards normalizing policy without an outsized impact on the economy.

"Although we expect substantial changes to the FOMC’s forward guidance, we do not think that the FOMC will want to send a signal that a “lift-off” is imminent. In this context, we continue to believe that the most likely timing for the first interest rate hike is June 2015. However, recent developments in US monetary policy have shifted the risk around our call forward."


Momo Stocks Whacked; Is It Alibaba Related or Something Bigger? Sep 15, 2014 01:53PM

Traders are noting a lot selling in momentum stocks today, with some of the hottest stocks in the market down 4-10%. Some suggest this could be related to portfolio managers making room for upcoming IPO Alibaba (NYSE: BABA), which is expected to debut on Friday, Sept. 19th.

The five hottest stocks in the market are all lower by a considerable amount:

  • Tesla Motors (NASDAQ: TSLA) Down 9.9%
  • SolarCity (NASDAQ: SCTY) Down 9.3%
  • El Pollo Loco (NASDAQ: LOCO) Down 5.4%
  • Mobileye N.V. (NYSE: MBLY) Down 4%
  • GoPro (NASDAQ: GPRO) Down 3.7%

While some are quick to point out Alibaba, others call 'hogwash' and blame the selling on an anticipated correction in the market. They cite recent 'toppy' action in the market and provide Friday's IPO for ReWalk Robotics Ltd. (NASDAQ: RWLK) as one reason. After a very weak pricing among institutional demand, shares are up 224% since its pricing. They also expect the Fed to make more explicit comments about future interest rate hikes. The Fed has a two-day meeting, September 16-17, and will issue a policy statement on the 17th.

(SI Note: TSLA, GPRO, and MBLY all had moderately negative analyst commentary today, although the comments don't align with today's selling pressure)


Ukraine Gov't, Rebels Enter Cease-Fire Agreement Sep 5, 2014 09:15AM

Ukraine government, and revels sign cease-fire agreement


Stocks Dip Into the Red Sep 4, 2014 03:03PM

Markets dipped into the red moments ago. The Dow is down 18, the Nasdaq is down 4 and the S&P 500 is down 3.5


ECB Decision Good for Stocks, Bad for Bonds - Tepper Sep 4, 2014 12:40PM

(Updated - September 4, 2014 12:40 PM EDT)

Appaloosa Management's David Tepper, maybe the most important bull in the current market run, told Bloomberg TV anchor Stephanie Ruhl that the rally in the bond market is ending after the ECB unexpectedly cut interest rates to spur economic growth and stave off the threat of deflation.

Tepper said, "What the ECB did today was very important. They want growth, an increase in the money supply and inflation. Basically what it all means for the markets is higher equity prices and a beginning of the end of the world bond market bubble…We are done."

He went on to say, "Draghi wants inflation in the Euro zone. He will not stop."

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