Another FOMC Meeting Is Upon Us

Equities start the day flat as another FOMC meeting is upon us. Futures spent the entire overnight session in a 2pt range so it was boring with a capital B. About as boring as your normal soc…rates lecture. Hopefully someone or something happens soon because if I have to write about the World Cup for a month I’m going to lose about half my readers. Since nothing out there seems to affect the market I’ve noticed bloggers and journalists switching gears to talk about inflation. Do we have any? Is it serious? Why does my wife spend $8 on milk? That kind of stuff. You know it’s boring when inflation is the topic du jour because it’s such an esoteric subject for the average reader. Yes we have inflation, but is 2% going to cause the Fed to start raising rates? I doubt it. Certainly it will come up in their discussion but until we see people paying $10 for a lb of ground beef it won’t be their central focus. A lackluster economy will always be foremost on their minds so as you read thru your favorite newspaper or financial journal know that inflation is just another topic to gin up fear. Anyway, it was a dreadfully slow morning so let’s see if anything happened before the actual meeting.

After the open we went absolutely nowhere on no volume.  Like the overnight session we in a tight range awaiting Janet and her crew of motley economists. Twitter was primarily concerned with two things today while we waited: The Washington Redskins and Australia vs the Netherlands. Should the Redskins change their name? I’ll let someone else decide that, I have enough angst rooting for Chicago teams. As for Australia vs Dutch…could you imagine a better after party than that? Who cares who won let’s mix Amsterdam with Syndey, would be an epic jam! (I also can’t support the Dutch wearing blue, just doesn’t feel right).  All morning long we waited for the decision while watching an aimless market. Did anything happen? Did the market actually move? Did someone at Gillette miss their opportunity with this World Cup shaving cream thing?  Read on to find out.

At 2pm ET the Fed told us exactly what we were expecting and the market embraced it like a kid coming home from college. They continued their taper pace and told us that “low for long” is here to stay. Yellen also said that recent inflation data is “noisy” so please read my first paragraph again. The market had a knee jerk move lower, then higher, then lower, then higher so yea, the efficient market theory is still in effect. However, by the time the bell rang we put together a monster rally and the S&P closed at a fresh high, 1957, up 0.7%. Winners: ADBE, APD, FDX, ADKS, and WAG.  Losers:  CAG, COH, ESRX, and VRTX.  Small caps also broke out of their downtrend and I’d argue they will retest their highs in the near future. Look, it’s pretty simple right now: The Fed thinks we are on the right path yet are willing to keep things accommodative to make sure. Why on God’s great green Earth would you fight that?  It’s been YEARS of the Fed saying “I’ve got your back”…YEARS…and every time they say it the market goes higher. We will know when they don’t have our backs anymore and that’s the time we run for the hills. But for now stay the course, add on dips, be optimistic that our jobs market and economy continue to heal.  Optimism builds skyscrapers, optimism makes people money, optimism leads to a happy life. This is no time to play Scrooge, get in there and lead the charge! Final score:  Dow +58bps, S&P500 +77bps, Nasdaq +62bps, Rus2k +55bps.   

News Highlights:

Continues to be weak on the article front, need some writers to step up, so let’s look at a crazy video.

If you’ve ever wondered how MMA could take itself to the next level, I have something for you.  You know what’s better than guys fighting in a steel cage?  Guys fighting while sky diving.   Yep, it’s a real thing.

Have a good night.