FOMC Leaves Rates Unchanged; Markets Respond Positively

The Federal Reserve's FOMC issued their policy statement at 2:00 pm ET, after a two-day meeting that was widely anticipated to keep the federal funds rate unchanged at 1.00-1.25%.

What the Fed did change in its statement was a few words which piqued the interest of the bullish crowd on Wall Street, saying that the US economy was displaying "solid" growth over the past few months, a change from their use of the word "moderate" or "moderately" to describe US economic growth.

That was enough for investors to snap up a few more mostly overpriced shares on the first day November, except on the NASDAQ, which was the one index to end the session at a loss.

The Fed is prepared to raise interest rates in December, boosting the federal funds rate to 1.25-1.50%, a level still well below what most economists consider normal and sustainable.

At the Close, Wednesday, November 1, 2017:
Dow: 23,435.01, +57.77 (+0.25%)
NASDAQ: 6,716.53, -11.14 (-0.17%)
S&P 500: 2,579.36, +4.10 (+0.16%)
NYSE Composite: 12,362.88, +21.87 (+0.18%)

Stocks End October on High Note: Fed's FOMC on Deck

With no rate hike expected from the ongoing FOMC meeting this week, investors tacked on small gains as October came to a close.

In what was a sluggish session, the main indices limped higher, awaiting jobs data later in the week and the unveiling of some kind of tax bill from congress.

The Fed will release its policy announcement at 2:00 pm ET on Wednesday, though most analysts insist there will be little to motivate buyers or sellers.

At the Close, Tuesday, October 31, 2017:
Dow: 23,377.24, +28.50 (+0.12%)
NASDAQ: 6,727.67, +28.71 (+0.43%)
S&P 500: 2,575.26, +2.43 (+0.09%)
NYSE Composite: 12,341.01, +21.54 (+0.17%)

Scary Stocks for Halloween, But Apple's Business Model May Be More Frightening

Stocks fell uniformly n Monday, for no apparent reason other than the usual causes, fear, caution, valuation.

With the major indices counting to hover around all-time highs, there's no doubt reason to maintain some degree of caution. In fact, if one were so disposed to selling at a profit, now, as the year winds into its final two months, might not be a bad time to do so, considering the tax angles for 2018.

While stocks are scary on the day before Halloween, perhaps one may really get tingles from Aaple's business model concerning cell phones. Here's a one-off demonstration by an admittedly older fellow:

Apple has a problem with its business model in that they have to keep selling essentially the same product over and over and over again, every two years or so (their imaginary product cycle) to conumers who are probably fiarly content with the model they currently own.

In other words, in order to maintain their high level of profitability, Apple has to sell new iPhones to current iPhone users every two years.

I am (well, was, when Steve Jobs ran the company) an ardent fan of Apple. In fact, I'm using a MacBook Pro to connect to the internet and compose this missive. Its from 2011, six years old, and still performs incredibly well, so, why hasn't Apple forced me to upgrade?

Different market, I guess.

Anyhow, not to get too deep into the weeds, the problem I see is that their business model, as currently constructed, is unsustainable. Anybody who thinks they need to upgrade their phone every two years is off their rocker. America was built on products that worked well and lasted a long time. Maytag washers, GE refrigerators, Ford trucks, etc.

If every company adopted Apple's business model of a 2-year product cycle, the average consumer would have been tapped out long ago.

Why don't they just install a kill switch which renders their phones inoperable after 24 months? Admittedly, I am not a big cell phone advocate. I use a 10-year-old flip phone, and very seldom, at that.

The author makes some good points. Apple should be scared about changing consumer preferences and habits, considering their iPhone creation is now ten years into its product cycle and one can only suppose that the original iPhone from 2007 probably still functions, albeit slower and with fewer bells and whistles than the current models.

A day approaches in which cell phones will be maxed out on power and abilities. That's when Apple's business plans hit the wall.

At the Close, Friday, October 30, 2017:
Dow: 23,340.28: -85.45 (-0.40%)
NASDAQ: 6,688.32, -2.30 (-0.19%)
S&P 500: 2,570.72, -8.24 (-0.40%)
NYSE Composite: 12,319.47, -46.97 (-0.39%)

Stocks continue Mostly Higher In Late October

Just a marker for the weekend notes interestingly that all of the huge NASDAQ gain was on Friday and the NYSE Composite actually posted a loss for the week.

This isn't really normal market behavior, but few are paying attention.

At the Close, Friday, October 27, 2017:
Dow: 23,434.19, +33.33 (+0.14%)
NASDAQ: 6,701.26, +144.48 (+2.20%)
S&P 500: 2,581.07, +20.67 (+0.81%)
NYSE Composite: 12,366.4346, +14.01 (+0.11%)

For the week:
Dow: +105.56, (+0.45%)
NASDAQ: +144.49 (+2.20%)
S&P 500: +5.86 (+0.23%)
NYSE Composite: -64.10 (-0.52%)

Stocks Rebound Thursday; 3rd Quarter GDP Increases 3%

Stocks bounced off of Wednesday's decline, with the Dow Industrials again leading the way on Thursday, shrugging off any suggestion that the economy or stock market was about to experience a slowdown.

On Friday morning, the Bureau of Economic Analysis (BEA) released the preliminary estimate of GDP for the third quarter, beating most of the positive projections, coming at at three percent growth.

Highlights of the report included a positive contribution from Personal Consumption Expenditures (PCE), offset by lower residential fixed investment and state and local government spending.

The 3.0% reading follows the second quarter's 3.1% advance, though the figures from the government are always subject to timely revisions (forever).

This should be good news for equity investors. The dollar is strengthening on the news.

Some are skeptical, however, noting that GDP is a very broad measure of economic strength or weakness and the fact that government spending is a component, which, at the federal level, is 40% borrowed money, making a mockery of the statistical importance of the data.

In other words, if a person borrowed $1000 to spend a total of $1800, one would not call that $1800 in spending, but $800 in real spending, plus $1000 in new debt, which, as everyone knows, should be repaid some day. As for the government and its $20 trillion - and growing - mountain of debt, that is probably never going to be repaid.

At the Close, Thursday, October 26, 2017:
Dow: 23,400.86, +71.40 (+0.31%)
NASDAQ: 6,556.77, -7.12 (-0.11%)
S&P 500: 2,560.40, +3.25 (+0.13%)
NYSE Composite: 12,352.43, +15.85 (+0.13%)