One day removed from the FOMC meeting and I am still confused. I know what Bernanke said, but I didn’t understand what he meant. Evidently I am not alone on this matter. Treasury bonds which rallied on Wednesday experienced some selling today as rates moved higher again. They pushed utilities lower along with other interest sensitive assets. The reason for the move in treasury bond yields? Good economic reports. Really? Philly Fed was the best part at 22.3 up from 9.3 in August! Rest was funny math to me. We could write the move today off as dust settling and too much exuberance on the lack of cuts in stimulus, but only time will tell if that is true. Regardless, today told me nothing! It was one of those days were everyone could have stayed home and done their laundry.
Stock of the Day: Apple
They are starting to make me seasick with the ride up and down lately. The stock was up more than 2% on the day as hope springs eternal over the new 5c iPhone sales in China. The media is happy, but the analyst and shareholders are still holding their collective breaths on this move. The stock moved back to $475 resistance and holding. This is one to watch going forward. It could offer some upside opportunity as a trade, but not much more short term. As good as the tune sounded today relative to China being sold out already on the pre-orders for the iPhone 5c… the proof is in the pudding. Watch and see…
Move of Interest: Crude Oil
The price of crude jumped over $108 again on Wednesday following the FOMC meeting. Today it retreated back to $106.25 mark? Is crude going up or down? I don’t own it, don’t want to own it. When the speculation gets to this point you are going to get whipped around too much to make any money. I will keep watching how this plays out near term, but something will have to give to get my interest.
Don’t Out Smart Yourself on This One: Gold
The bright yellow metal caught everyone’s attention again on Wednesday with a jump from $1309 to $1365 on the Fed announcement. Inflation is coming now! If inflation hasn’t happened during the last $5 trillion dumped into the economy how is the continuation of $85 billion going to do it? Econ 101 states supply and demand imbalance causes inflation. Too much money chasing too few goods. Demand for gold is at a low. Demand for goods??? GDP of 2% (I am rounding it higher) isn’t exactly too few goods. Speculation says, too much money from the Fed will lead to future inflation. Okay I get that, but when is it going to be too much money from the Fed? I know I am being a pain in the ass on this, but the point is simple… no signs of inflation yet, and this move is being driven by pure speculation. Not interested in this commodity trade anymore than the one in oil. Don’t be out smarted by the media or the pump and dump specialist in the gold arena.
He Said What?
Warren Buffet was asked in an interview today who should be the next Federal Reserve Chairman, and he replied, Ben Bernanke! Yes, that is right he said, Ben Bernanke! I stated on Monday in our video update that I believed that Ben Bernanke would be reappointed Fed Chairman after the Larry Summers withdrawal. This it the first thing that Warren and I have agreed on since he bought Wells Fargo in 2009. My favorite rationale given by Mr. Buffet was… I don’t know Yellen, but I do know Bernanke and he as guided us through the last five years. Well said, I don’t know Yellen either. The less disruption to the this whole stimulus money dump the better for the markets, and the global markets for that matter. All hail Warren!
Tomorrow is another day and it is one that ends the trading week. I don’t expect much more than what we saw today. More digestion and looking at how the Fed actions on Wednesday will impact stocks going forward. Don’t forget to read my Daily Trading Notes in the morning for more on how to address the trading day. See you then!