In my view the equities discern little difference between the term “considerable time” and “patient.” The S & P 500 had its largest advance since October 2013, the result of the post FOMC meeting statement where the Committee stated “it can be patient in beginning to normalize the stance of monetary policy.”
Consensus had thought the term “considerable period” would be dropped, a view that I did not share because of the collapse of oil and the geopolitical and geostrategic implications. I do think it is noteworthy the FOMC did remark the new guidance is “consistent” with its previous “considerable time” wording.
I think the new wording offers the Federal Reserve considerable flexibility in its inevitable decision as there are various interpretations of “patience.” FRB Chair Yellen stated the Central Bank will react to economic data as the data unfolds further stating “the statement that the Committee can be patient should be interpreted that it is unlikely to begin the normalization process for at least the next couple of meetings,” which suggests the first change may not occur until April.
There was no mention of global market turmoil sparked by oil and the Russian currency crisis.
Speaking of oil, oil closed nominally higher, perhaps the result of traders closing out positions before option expiration on Friday.
Will the rally continue today? The year is quickly coming to an end and typically those issues that have been crushed the greatest stage the strongest rebound going into the rebound. Was yesterday a harbinger of trading for the next 30 days as energy grossly outperformed?
As noted the other day, the energy sector is priced for an extremely deep recession with the S & P 500 energy sector priced at the lowest level as compared to the S & P 500 since 2000.
Today weekly jobless claims, the LEI and a regional manufacturing index are released. How will this data be released?
Last night the foreign markets were up. London was up 1.16%, Paris up 2.72% and Frankfurt up 2.21%. Japan was up 2.32% and Hang Sang up 1.09%.
The Dow should open sharply higher on the dovish Fed statement. The 10-year is off 11/32 to yield 2.17%. Oil is up about $1.25/barrel.