Friends
Traders continue to hold out hope that the behind the scenes talks are going much smoother than the sound bites that are heard daily on the fiscal cliff issue. Perhaps the President and the Speaker are making progress out of the glare of the camera lights. We can only hope. In the meantime, stocks continue to confound the bears while creeping higher.
The Fed begins a two day meeting tomorrow and we would expect that they will signal the continuation of the “twist program” where they are selling shorter securities to buy longer securities. The $45 billion a month of additional buying should most likely be continued well into next year, and added to the $40 billion promised recently, the $85 billion a month buying spree confirms that the Fed’s “all-in” attitude will continue.
For the day, the Dow Jones Industrial Average was up 14 points to close at 13,169. The S&P 500 was up a fraction of a point to finish the day at 1418. Gold was up $7 to trade at $1713 per ounce, while oil was down $.23 to trade at $85.70 per barrel WTI.
Despite last week’s better than expected employment report, we still see the Fed remaining completely accommodative. Unfortunately, as we have mentioned for quite some time now, we seem to be experiencing diminishing returns when it comes to the Fed’s policies. Yes, stocks are hanging in there quite impressively at the moment, but a header off the fiscal cliff may shake the bulls to their core. In other words, the Fed’s done all they can do, the next major move in the markets will be based on politicians. Hmmm, that’s not really very comforting is it?
Have a nice evening everyone.
