Europe Comes To The Rescue

Equities start the day higher as Europe comes to the rescue. As I sat watching Tony Romo blow another game in December futures looked pretty bad. Check out this chart of overnight price action....wonky huh? What’s that big drop all about? I’m guessing someone went stop hunting in thin markets and promptly got crushed. Anyway, Europe came to the rescue with fantastic PMI readings and if you are looking for ideas in 2014 let’s remember that Europe is JUST recovering, you aren’t late to that game. So here we are in the final week of the year for market movement. Tuesday and Wednesday will feature breathless anticipation of Ben Bernake’s last meeting in which he may or may not taper. Let us recall that last week’s gruesome price action was the market changing its mind about what Ben will do. It went from “yea he might pull the trigger” to “now that he’s pulled the trigger when will he reload?” I still don’t think he’ll do it because of one thing…inflation. It’s just not there (you know, in things other than Medical Costs and Tuition. Because hey, tuition SHOULD go up every single year for no reason. Schools need those 28 deans, especially the guy who runs aquatics and student lounges). We may have improving economic activity, and we may be on the right path with jobs, but we just aren’t where they want inflation to be. Plus, can’t you just see this guy in his big leather chair, smoking a pipe, sipping on some Pappy saying to himself “these fools just don’t learn do they? In my entire tenure as Fed Chairman I’ve never leaned towards removing extraordinary measures and they think I’m going to do it at my last meeting? *chortle chortle*, snicker snicker”.

After the open I thought we were in for a monster day, with all the selling we saw last week I would’ve bet my Ugg slippers that we’d rip (don’t hate, they are comfy as heck). Unfortunately the high of the day was in after the first 10 minutes then we slowly slid lower thru lunch. Is there a more petulant song than “We Wish you a Merry Christmas” ?? Who would want a bunch of people camping out in your home demanding some random pudding? Here, take some Jell-o and go pound sand. And how can we ever forgive Paul McCartney for the Christmas tragedy he foisted on us with “Wonderful Christmastime”? You think he sat down one day and said “I’m a freaking Beatle, I could sing about a warm sack of kitty litter and people will worship me!” So yea, mostly sideways price action for the first half of the day, clearly everyone is waiting for the big show later this week. Winners: LSI, EXPE, MNST, TSO, AGN, and HLF (did an accounting selfie, say they are fine). Losers were ADBE, CCI, SWY, and DG. TWTR had a weird day, at one point it touched $60 which gave it a market cap around $33B! Let’s play one of my favorite games shall we? What other companies have the same market cap as our New Kid on the Block! You ready? Here we go: So there’s John Deere, employs 66k people, been around since, oh 1837, sells massive tractors to the world that are used to provide food so we don’t all die. What else…there’s General Dynamics, employs 32k people, been around since 1899, makes fighter planes and cool missiles. You know, modern day bows and arrows. Finally we have Kraft foods, employs 23k people, been around in various forms for decades, makes my daughters favorite food (mac) and other tasty treats like Chips Ahoy. So there you have it Twitter, you are in fine company now. But hey, I mean tweets are cool right? Those 2,300 people in San Fran are changing the world!! (I’ll admit that I love TWTR, couldn’t live without it. It’s easily the best source of breaking news for our profession)

The back half of the day brought nothing new, in fact for all intents and purposes we spent the entire session in a 5 point range. But we did close up on the day so we’ll take it (especially after that ugly week). The market has now positioned itself for a December taper, to wit the 10yr yield is almost exactly where it was the last time everyone predicted this nonsense. I stand by the notion that they will NOT taper and the market will have the same reaction it did then. And if I’m wrong? Then so be it, at least we’ll have moved on to a new phase in the market, one in which the Fed says “you’re on your own here kids”. Exciting times! I’ll take either outcome! Bring on the Figgie pudding! Final Score: Dow +63bps, S&P500 +63bps, Nasdaq +56bps, Rus2k +116bps

News Highlights:

We’ll end tonight with a great video passed to me by my old friend @jasonsissel. Amazing what people can do with a road bike…I can barely even ride one.

Have a good night.