David Moenning Daily State of the Markets: 11/23
Tweet
Share
E-mail
Is the Fed About Done?
Until 2:00 pm yesterday, traders appeared content to focus on their Thanksgiving holiday plans and simply wait for the closing bell. After an impressive run over the past 4 weeks, the bulls are obviously content with their work while the bears are clearly on hiatus. So with stocks overbought and the Holiday shopping season on tap, most investors probably would have been happy to leave things where they were and head home early.
But the release of the minutes from the latest Fed meeting definitely changed the mood. In short, the minutes energized the market and provided a reason for traders to keep the November rally rolling. While you had to read between the lines, the minutes suggested that the Fed was nearing an end to their tightening campaign.
More specifically, the FOMC minutes indicated that future Fed decisions are likely to be more dependent on data and that a change in the language would likely needed before long. In other words, the Fed appears close to making a checkmark on their stated objective of returning the Fed funds rate to neutral. This means that the now familiar phrase �at a pace that is likely to be measured,� may soon be history. The minutes also confirmed that (1) the Fed believes the disruptions to the economy from Katrina and Rita would be temporary and (2) they need to monitor the effects of higher oil prices.
Stocks added to their recent run on the news and the thinking here is simple. The market has been on the defensive for the entire year due to worries over the economy, inflation, energy prices, and the Fed. However, recently we�ve learned that the economy is �doing just fine, thank you.� We�ve learned that outside of oil, inflation is not a major threat. We�ve recently learned that energy prices actually can go down. And now it appears that the Fed may soon be done raising rates. So in short, one can argue that most of the headwinds that stocks have encountered lately seem to be easing.
Turning to this morning, as expected, things are pretty quiet ahead of the Thanksgiving holiday. Traditionally, the day before Thanksgiving is one of the lightest trading days of the year so history tells us to expect little movement outside of a couple programs. Oil is lower this morning and is currently trading at $58.24, which is down -$0.60. Bond yields are steady with the 10-yr currently at 4.44%. And stock futures are currently pointing to a softer open (Dow -14, S&P -0.10, and NASDAQ +1.50).
So with little except for the University of Michigan�s Consumer Sentiment number on tap for today, let me take this opportunity to wish everyone safe travels and a Happy Thanksgiving.
Stocks "In Play" This Morning:
GOOG � WJS column says this is not the time to buy
RIMM � Reduces outlook for subscriber growth
WEBX � Downgraded at Lehman
CHINA � Reports $0.03 vs. $0.02
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: none
To see David Moenning�s Trading Record, his (Strong Buy) List, or the rank for any Top Guns Stocks, visit: http://www.AnotherWinningTrade.com/SI
Until 2:00 pm yesterday, traders appeared content to focus on their Thanksgiving holiday plans and simply wait for the closing bell. After an impressive run over the past 4 weeks, the bulls are obviously content with their work while the bears are clearly on hiatus. So with stocks overbought and the Holiday shopping season on tap, most investors probably would have been happy to leave things where they were and head home early.
But the release of the minutes from the latest Fed meeting definitely changed the mood. In short, the minutes energized the market and provided a reason for traders to keep the November rally rolling. While you had to read between the lines, the minutes suggested that the Fed was nearing an end to their tightening campaign.
More specifically, the FOMC minutes indicated that future Fed decisions are likely to be more dependent on data and that a change in the language would likely needed before long. In other words, the Fed appears close to making a checkmark on their stated objective of returning the Fed funds rate to neutral. This means that the now familiar phrase �at a pace that is likely to be measured,� may soon be history. The minutes also confirmed that (1) the Fed believes the disruptions to the economy from Katrina and Rita would be temporary and (2) they need to monitor the effects of higher oil prices.
Stocks added to their recent run on the news and the thinking here is simple. The market has been on the defensive for the entire year due to worries over the economy, inflation, energy prices, and the Fed. However, recently we�ve learned that the economy is �doing just fine, thank you.� We�ve learned that outside of oil, inflation is not a major threat. We�ve recently learned that energy prices actually can go down. And now it appears that the Fed may soon be done raising rates. So in short, one can argue that most of the headwinds that stocks have encountered lately seem to be easing.
Turning to this morning, as expected, things are pretty quiet ahead of the Thanksgiving holiday. Traditionally, the day before Thanksgiving is one of the lightest trading days of the year so history tells us to expect little movement outside of a couple programs. Oil is lower this morning and is currently trading at $58.24, which is down -$0.60. Bond yields are steady with the 10-yr currently at 4.44%. And stock futures are currently pointing to a softer open (Dow -14, S&P -0.10, and NASDAQ +1.50).
So with little except for the University of Michigan�s Consumer Sentiment number on tap for today, let me take this opportunity to wish everyone safe travels and a Happy Thanksgiving.
Stocks "In Play" This Morning:
GOOG � WJS column says this is not the time to buy
RIMM � Reduces outlook for subscriber growth
WEBX � Downgraded at Lehman
CHINA � Reports $0.03 vs. $0.02
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: none
To see David Moenning�s Trading Record, his (Strong Buy) List, or the rank for any Top Guns Stocks, visit: http://www.AnotherWinningTrade.com/SI
You May Also Be Interested In
- After-Hours Stock Movers: AAPL, AMZN, COIN, RBLX, RDDT, AXTI, FND, WU, GDDY
- After-Hours Stock Movers: F, BE, STX, WDC, KLAC, SWKS, NXPI, CSGP, ENPH
- After-Hours Stock Movers: FFIV, CDNS, APLD, RMBS, ESI, SANM
Create E-mail Alert Related Categories
Contributors, Special ReportsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
