Daily Market Update – December 14, 2016 (Close)
The FOMC Statement release came this afternoon and we all knew what was going to happen.
That was, unless of course, the FOMC decided to show that it still means something and isn’t just an assembly of intellectuals incapable of action.
In that event, the FOMC would have, of course, raised the interest rate to at least match what natural market forces have done, but they would taken it a step further and go beyond the o.25% increase that is being factored in by everyone.
But we all also pretty much knew that wasn’t going to happen, because the last thing intellectuals want is to unleash a bully and you know who that would be.
And do, it didn’t happen.
What did happen was an example of what happens when the leaders are more the followers and when they sow seeds of uncertainty and confusion.
This morning the futures wee taking a little bit of a break after another strong gain that put the DJIA within easy reach of 20,000.
But as the FOMC announced their 0.25% rate the market really didn’t quite know what to do.
Should it celebrate or agonize, or should it freeze?
It took the Chairman’s press conference to answer that question, but the answer was that there was too much uncertainty about what was ahead and that no one had really factored in a Trump Presidency.
More importantly, there was the suggestion that instead of the 2 hikes most expected in 2017, there might be room for 3 hikes.
Of course, we expected 4 hikes in 2016 and here we are.
Last year at this time when the FOMC raised rates it may have been the fear of even more rate hikes that cut the celebration short and gave us a real correction.
That correction was a quick one and short lived, but unless there was really something totally unexpected coming from today’s statement release or a slip of the tongue afterward in the press conference, it would have been hard to see that same response in the coming weeks.
We can all see the economic signs on the road, although the question may now be how quickly will things heat up if the bluster is for real.
I remain ready to spend some cash, but not feeling compelled to do so.
I hope that the rally in commodities continues after taking a day or 2 or 3 off and I hope to see 2017 get off to the kind of start that just perpetuates 2016.
I was happy to take advantage of some of that commodity confusion and rollover both positions set to expire this week.
The kind of confusion that creates opportunity is good and at this point, I still like having cash in hand and opportunities to spend it on.