Picks of the Day December 14, 2017.
Yellen Rules Show!
More than anything, yesterday, it was Yellen in the limelight. Could it have been her “last day in the sun?” Well, if it was, what a day she had! Commenting on everything from bitcoin to stock valuations, Trump’s tax reform and future monetary policy, the market traded to the beat of her every word, both what was said and what was not!
A Few Highlights: “We are enjoying solid economic growth with low inflation. And the risks to the global economy look more balanced than they have in many years.” Yellen added, “I think when we look at other indicators of financial stability risks, there is nothing flashing red there or possibly even orange.” Likewise, when it came to the banking system, she praised the sector’s resilience, noting the absence of a “worrisome buildup in leverage or credit growth at excessive levels.” With Trump on the White House lawn touting a prospective 4% increase in GDP and making that claim that the U.S. is “on the verge of a new economic miracle,” Yellen had words of her own about Trump’s tax cuts: “It’s not a gigantic increase in growth,” she told world markets in a press conference after the rate hike.
And what did Yellen have to say about Bitcoin. When confronted about the risk to the financial system from an implosion of the cryptocurrency, she didn’t miss a beat, stating: “I would simply say that bitcoin at this time plays a very small role in the payments system,” adding, that it “is not a stable store of value, it doesn’t constitute legal tender, and it is a highly speculative asset.” She also used the word “limited” in describing the impact of a fall in the “currency” on the financial system.
Whereas Yellen didn’t mince words about Bitcoin, she did seem somewhat bullish on the stock market, noting that though prices seemed historically high, it could be that they still have more room to grow. “Economists aren’t great at knowing what appropriate [stock market] valuations are, and the fact that valuations are high doesn’t mean they are necessarily overvalued.”
Following the announcement of the hike itself, U.S. stocks climbed, the Dow recording triple digit gains; bonds, though, fell, gold climbed and the dollar took a spill after the Fed only forecasted three, as opposed to four rate hikes for this coming year. The dollar is up against overseas headwinds, Europe shoring up its growth rate, and Trump having faced difficulties pushing any significant legislation through Congress.
The Fed, along with its quarter-percentage-point hike – the third this year – raised its 2018 growth forecasts from 2.1% to 2.5%. The S&P 500 saw choppy trading after the Fed statement, ending slightly lower, but the NASDAQ and the Dow both climbed on the day. It was a late plunge in bank stocks that did the S&P 500 in, the index’s financial sector dropping 1.3% on the day. Consumer staples were the strongest sector on the S&P 500, tacking on 0.5%.
In political news, Democrat Doug Jones’s victory over Moore in deep red Alabama cast doubt, in the views of some, about the Republican’s ability to push through tax legislation. The Republican Senate majority is now razor thin, 51-49. Keep your eyes peeled today on what happens with the tax reform negotiations, the corporate tax rate not yet a done deal. Republicans from both chambers want the final legislation on Trump’s desk come the end of this year.
The S&P 500 recorded 39 new 52-week highs, with no new lows; the NASDAQ saw 67 new highs and 46 new lows. Volumes on U.S. exchanges came out at 6.77 billion shares, slightly above the 6.53 billion average over the last 20 trading days.
Today’s Macro Calendar: Jobless claims, retail sales and import and export prices will be coming out at 8:30, followed by business inventories at 10:00. The EIA Natural Gas Report will be released at 10:30, with the Fed Balance Sheet and money supply figures, then, at 16:30.
Disney (DIS) is a stock to watch today, the behemoth close to purchasing a large chunk of 21st Century Fox. Disney wants to accelerate its media streaming capabilities, acquire lucrative film franchises and bolster its TV business.
Thursday’s Hot Stocks: BAND, PIR, ABM, NDSN
|Tuesday||FOMC Meeting Begins|
|Tuesday||6:00||NFIB Small Business Optimism Index||104.2||Medium|
|Wednesday||8:30||Consumer Price Index||0.4 %||High|
|Wednesday||14:00||FOMC Meeting Announcement||High|
|Wednesday||14:30||Fed Chair Press Conference||High|
|Thursday||8:30||Jobless Claims||239 K||Medium|
|Thursday||8:30||Retail Sales||0.3 %||Medium|
|Thursday||8:30||Import and Export Prices||0.7 %||Medium|
|Thursday||10:00||Business Inventories||-0.1 %||Medium|
|Friday||8:30||Empire State Mfg Survey||-0.1||Medium|
|Friday||9:15||Industrial Production||0.3 %||Medium|
|CASY||Casey’s General Stores, Inc.||PM||Monday|
|PAY||VeriFone Systems, Inc.||PM||Tuesday|
|DVMT||Dell Technologies Inc.||AM||Thursday|
|COST||Costco Wholesale Corporation||PM||Thursday|
|ADBE||Adobe Systems Incorporated||PM||Thursday|
New York Strategy Swing