The stock market took a breather today and waited patiently for the Fed’s announcement that it was indeed raising rates another 25 bps, not much of a surprise unless you’ve been on walkabout in Australia for the last two years. I remember the good old days when the Fed making a move in interest rates was newsworthy, these days it’s become old hat. Oh, the Fed’s raising another 25 bps, pass the salt.
The world received another round of the same medicine that the Fed has delivered for the last 12 meetings. It’s like boiling a frog. They say that if you put a frog in lukewarm water and then turn up the heat slowly, the frog just relaxes and then gets boiled. As market participants, there are so many people who are that frog. The Fed keeps cranking up the interest rate heat but everybody just stays in the market.
Well, the owners of DELL decided they didn’t want to stick around too much today as it got sold for about 8 percent to a price level not seen since early 2003, on volume of over 100 million shares. The immediate beneficiary of that news was their beloved partner Intel Inside, INTC, who dropped almost 4 percent today on 85 million shares. That drop to 22.65 pushes INTC down to within a point of the 52 week low at 21.89.
In the news today, besides the Fed, oh that’s right, that wasn’t news. In the news today, the ISM manufacturing number was 59.1 with anything above 50 being positive. The expectation was for a drop from 59.4 to 57 so the number beat expectations. On Thursday we get the ISM non-manufacturing number which is widely expected to show a good increase from 53.3 to 58.
US auto sales slumped 14% in October, not a very good showing as higher gas prices and the end of employee discounts are being blamed for the slide.
The Wall Street Journal will be reporting in Wednesday’s edition that “REIT Stocks Battered By Earnings Disappointments”. We keep watching for these types of articles suggesting that the housing juggernaut is slowing down. We have seen enough articles in the last several months to start believing, that is, if we hadn’t believed before. Right now, the media is just confirming our suspicions.
The market is finally out of oversold territory and is moving in the direction of being overbought. We think that the week will have trouble sustaining a positive tone. There are so many people that want/need a higher market and we don’t think it will oblige.
Be careful.
Dow Industrials: 10,406.77 -33.30
RYVNX: 21.33
TLT: 89.28
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