Monday Morning Musings
The market opened on a weaker note after substantial declines in Asia overnight. Japan fell -4.0%, Hong Kong -4.3%, and Shanghai -7.1%. This was a combination of profit taking from the recent bounce, coupled with fears that out Fed might not cut rates as much as it needs to.
Speaking of the Fed, they meet this week, and there is much angst about what they will do. Last week, the odds were still good that they would cut 50 bps, which they really need to. But we know that this Fed has been clueless, and I am worried that they will only go 25 bps at best.
New homes sales data was weak once again this morning, and the median sales price in December was -10.9% yr/yr, the largest drop in 4 decades. Does the Fed worry about the 'wealth effect'?
The market has since bounced back from its early declines. There were some solid earnings reports this morning from McDonalds (MCD), Corning (GLW), and Halliburton (HAL), although MCD stock is lower.
Oil is lower this morning, which was weighing on the energy stocks early on. The 10-year yield is flattish at 3.59%. Banks are again leading the market so far, with semis lagging.