Daily Market Update – January 28, 2015 (8:45 AM)
Yesterday wasn’t very good and it all seemed to start with some disappointing earnings numbers that showed the negative side of lower oil prices and a stronger dollar.
Then came data that not only showed less durable goods purchases than would have been expected with the economy growing and with energy price declines fueling new spending, but also revised past months downward.
This morning we start after getting some good news from Apple and Boeing. Along with their sales, revenues and profit news came no real currency news to detract from the feeling that things are looking up on the consumer end of things and with global sales of airplanes.
So this morning, while not really showing much of a bounce from yesterday’s terrible trading, is at least pointing higher in advance of today’s FOMC Statement release.
With Morgan Stanley now believing that any interest rate hike from the FOMC won’t come until sometime in 2016 and with the bond market confirming that belief lately, there would be lots of angst if the FOMC were to do otherwise. However, with the latest statistics, including Retail Sales and now Durable Goods, the real surprise is that there doesn’t seem to be the upward pressure on prices that we’ve all thought was coming.
That has to raise the question of where that upward pressure is hiding and why we aren’t seeing any.
While today’s FOMC Statement probably won’t provide too much additional information, Friday’s GDP data should begin to give us some idea of whether these decreasing oil prices are somehow findingtheir way into the economy. At the very least there’s no currency consideration to offset things. Either people have more money to spend and are spending it, they have more money and aren’t spending it or they really don’t have much more money after spending it on their cellphone, streaming and cable plans.
With the market pointing tentatively higher this morning it would be nice to see some opportunity to sell some calls or roll over something other than the Gold Miners ETF, which has been a regular trade lately, as precious metals have taken on some life, as they go about a step and a half forward for every step backward, but that’s a very profitable path to take.
With a few positions set to expire this week I wouldn’t mind if the market made some recovery from yesterday’s loss and would actually like to see all 4 remaining positions get assigned this week so that some more cash can be piled up, as there isn’t too much doubt that the market is taking on a very different tone and has become directionless.
Next to having more positions covered, during that kind of directionless trading and sentiment, my favorite position is to have cash to spend, or at least have the option of spending it, as may look warranted.
Today will probably be a day of watching. While I’m still open to making a new position purchase it’s probably not too likely for the rest of the week as there are still too many unknowns in just the last 2 1/2 days left of trading that could take stocks in either direction and in a big way.
Although I’m not really expecting too much movement to come from the FOMC news today, the GDP may be the wild card. Sooner or later the thesis that had everyone optimistic about plunging oil prices has to either be validated or repudiated.
I’m still hoping to see it validated and the market embracing it as good news..