Janet came to the rescue Tuesday, reassuring the market that the Fed isn’t going to go nuts with a string of interest rate hikes. So, how did the Fed Chair embellish her March 26 press release and distance herself from that December rate hike?
Yellen’s Speech
In my remarks today, I will explain why the Committee anticipates that only gradual increases in the federal funds rate are likely to be warranted in coming years, emphasizing that this guidance should be understood as a forecast for the trajectory of policy rates that the Committee anticipates will prove to be appropriate to achieve its objectives, conditional on the outlook for real economic activity and inflation. Importantly, this forecast is not a plan set in stone that will be carried out regardless of economic developments. Instead, monetary policy will, as always, respond to the economy's twists and turns so as to promote, as best as we can in an uncertain economic environment, the employment and inflation goals assigned to us by the Congress.
The proviso that policy will evolve as needed is especially pertinent today in light of global economic and financial developments since December, which at times have included significant changes in oil prices, interest rates, and stock values.
Interestingly, while the market reacted the way one might have expected, there was indecision, and the Dow only finished up 97 points (it was the high of the session). The market breadth showed that blue chips continued to surge to new highs; several household names at all-time highs, including General Mills (GIS), Coca-Cola (KO), and Tyson Foods (TSN), but it was the NASDAQ high-flyers that acted great. If the Fed gives the green light (wink-wink), watch for fast money players to put their cash to work big time.
Breadth |
NYSE |
NASD |
New Highs |
185 |
64 |
New Lows |
12 |
49 |
Advancers |
70% |
78% |
Decliners |
28% |
20% |
The NASDAQ popped 1.65%, led by the new Four Horsemen.
However, that spike actually could be a major buy signal as it cleared a key resistance point; the only problem was the lack of volume. I can deal with breakouts on light volume, but I really want to see greater conviction. Maybe that happens after the jobs report…I’m just not sure if it’s on the upside. LOL
