WEEKEND WRAP: Powell Puts Positive Spin On Rates, Economy; Stocks Respond With Banner Gains

As much as stocks were flattened last week, they gained back this week, and then some, rebounding mainly off the lips of Fed Chairman Jerome Powell, who uttered two words which are sure to become ensconced within the annuls of great Fed Chairman one liners, such as Alan Greenspan's notorious "irrational exuberance."

Having a way with words, especially concise two-word constructs, Powell uttered, in a speech at the Economic Club of New York, that interest rates were "just below" neutral, sending stocks spiraling upwards on Wednesday.

Those gains followed two prior sessions with more pedestrian advances, the Wednesday push a 617-point blast on the Dow which sent the industrials into positive territory not only for the month, but for the year as well. The week's gains were capped off by a window-dressing close on Friday, with the Dow posting a nearly 200-point gain, all of which came after 1:30 pm ET.

Events of the week - from Powell's speech to Trump's dealings at the G20 in Buenos Aires - managed to put a positive spin on the outlook for stocks going into the final month of the year and the holiday shopping season.

Effectively, what Powell's statement on interest rates did was virtually assure a 25 basis point hike in the federal funds rate and then a pause at what would have been the next logical rate increase, at the March FOMC meeting, and beyond. Whether the Fed's members actually believes that an overnight rate of 2.25-2.50% neither hinders nor aids the US economy is a question open for debate, as most believed that more rate hikes were necessary per the minutes of the last FOMC meeting earlier in November.

That sentiment put a bit of a damper on the market when released on Thursday, but, as Wall Street memories seem exceedingly short these days, the flattish close didn't have any lasting effect.

Once into 2019, the Fed is likely to continue to spin positively, as Janet Yellen's honorable mention entry in the two-word scrabble that is Fedspeak, "data dependent" should be rolling off the lips of more than a few Fed officials in the cold months of winter.

Undeniably, a dovish Federal Reserve can be nothing but good for stocks, which are the de facto underpinning of the US economy. The Fed - and Powell in particular - may have been taking a sideways glance at the housing market as well, another pillar in the economic construct. Rising mortgage rates have shut down advances in new and existing home sales, punishing home builder stocks like Lennar (LEN), D.R. Horton (DHI), and KB Home (KBH). A stagnant housing market may have been instrumental in the formation of Powell's suddenly-accomodative stance.

Even with the rebound this week, stocks still have a pretty large slope to scale to get back to September or October's all-time highs. The NASDAQ still has issues with falling tech stocks and GM's announcement that it was shuttering five factories and laying off 14,000 workers had a chilling effect on what was an overwhelmingly positive week.

Elsewhere, oil continued to hover at the $50 level for WTI crude, precious metals remained flat to negative, but other global markets perked up a bit.

When the FOMC meets on December 18-19, there will be little doubt about their direction. A rate hike of 0.25% is practically baked into the cake. After that, however, it certainly appears the Fed will consider its work done, for now, at least. The next rate hike - and there is almost certainly to be one or two in the next 12-18 months - will probably come after some gaudy economic data or fresh highs in the stock market.

Until then, the skies are blue and smooth sailing is ahead.

Dow Jones Industrial Average November Scorecard:

Date	Close	Gain/Loss	Cum. G/L
11/1/18	25,380.74	+264.98	+264.98
11/2/18	25,270.83	-109.91	+155.07
11/5/18	25,461.70	+190.87	+345.94
11/6/18	25,635.01	+173.31	+519.25
11/7/18	26,180.30	+545.29	+1064.54
11/8/18	26,191.22	+10.92	+1075.46
11/9/18	25,989.30	-201.92	+873.54
11/12/18	25,387.18	-602.12	+271.42
11/13/18	25,286.49	-100.69	+170.27
11/14/18	25,080.50	-205.99	-35.72
11/15/18	25,289.27	+208.77	+173.05
11/16/18	25,413.22	+123.95	+297.00
11/19/18	25,017.44	-395.78	-98.78
11/20/18	24,465.64	-551.80	-650.58
11/21/18	24,464.69	-0.95	-651.53
11/23/18	24,285.95	-178.74	-830.27
11/26/18	24,640.24	+354.29	-475.98
11/27/18	24,748.73	+108.49	-367.49
11/28/18	25,366.43	+617.70	+250.21
11/29/18	25,342.72	-23.71	+226.50
11/30/18	25,538.46, +199.62	-23.71	+426.12

At the Close, Friday, November 30, 2018:
Dow Jones Industrial Average: 25,538.46, +199.62 (+0.79%)
NASDAQ: 7,330.54, +57.45 (+0.79%)
S&P 500: 2,760.17, +22.41 (+0.82%)
NYSE Composite: 12,457.55, +68.18 (+0.55%)

FOR THE WEEK:
Dow: +1,252.51 (+5.16%)
NASDAQ: +391.55 (+5.64%)
S&P 500: +127.61 (+4.85%)
NYSE Composite: +421.31 (+3.%0%)

Stocks Flat after Fed Minutes; Dow Rally Ends At Three

Stocks were a bit tepid on Thursday, understandable after the huge Wednesday run-up on the back of Fed Chairman Jerome Powell's comments on interest rates.

Investors were moved to the downside by bad housing data and an uptick in unemployment claims announced prior to the opening bell, but moved forward throughout the session, though the closing half hour left much to be desired.

Dow Jones Industrial Average November Scorecard:

Date	Close	Gain/Loss	Cum. G/L
11/1/18	25,380.74	+264.98	+264.98
11/2/18	25,270.83	-109.91	+155.07
11/5/18	25,461.70	+190.87	+345.94
11/6/18	25,635.01	+173.31	+519.25
11/7/18	26,180.30	+545.29	+1064.54
11/8/18	26,191.22	+10.92	+1075.46
11/9/18	25,989.30	-201.92	+873.54
11/12/18	25,387.18	-602.12	+271.42
11/13/18	25,286.49	-100.69	+170.27
11/14/18	25,080.50	-205.99	-35.72
11/15/18	25,289.27	+208.77	+173.05
11/16/18	25,413.22	+123.95	+297.00
11/19/18	25,017.44	-395.78	-98.78
11/20/18	24,465.64	-551.80	-650.58
11/21/18	24,464.69	-0.95	-651.53
11/23/18	24,285.95	-178.74	-830.27
11/26/18	24,640.24	+354.29	-475.98
11/27/18	24,748.73	+108.49	-367.49
11/28/18	25,366.43	+617.70	+250.21
11/29/18	25,342.72	-23.71	+226.50

At the Close, Thursday, November 29, 2018:
Dow Jones Industrial Average: 25,342.72, -23.71 (-0.09%)
NASDAQ: 7,275.87, -15.73 (-0.22%)
S&P 500: 2,739.26, -4.53 (-0.17%)
NYSE Composite: 12,417.39, -0.24 (0.00%)

Fed Chair Powell Currys Favor With Wall Street: Rates "Just Below" Neutral

In what can only be considered an obvious and well-intentioned nod to Wall Street, Federal Reserve Chairman Jerome Powell, speaking at the prestigious Economic Club of New York, noted that the federal funds rate is "just below" the level that economists consider neutral, neither encouraging risk nor dissuading it.

Powell's remarks sparked a rally on Wall Street that was the best in eight months, and probably put to rest any ideas investors may have had of a bear market developing in stocks.

The Fed chairman is no doubt a stock picker and investor himself, so he's well aware of the kind of volatility that has been plaguing stocks in recent weeks. He also may have taken a bit of a queue from President Trump, who has been consistently complaining about the pace of recent Fed rate hikes.

What this means for interest rates is likely that the Fed will go ahead, as expected, and raise the federal funds and prime rates once more in December, and then take a wait-and-see approach going forward. The Fed had been expected to raise rates three more times in 2019, though that approach was largely nixed by Powell's dovish remarks today.

At the most, the Fed might raise rates twice in the coming year, though once or none at all might be closer to the mark. Fueled by easy money policies the past ten years, the stock market, being a key cog in the US economy, would be hard set if low lending rates were curtailed further.

While Wall Street cheered the development, the biggest winners should be consumers, who are addicted to credit and have seen credit card interest rates soar over the past two years as the Fed, like clockwork every quarter, raised rates to which many credit accounts are tied. A cessation of the rate hikes will come as a relief to anybody carrying a credit card balance.

Combined with gains from Monday and Tuesday, today's positive close pushed the Dow back into the green for the month, and the year.

Who said the Fed doesn't pay attention to the stock market?

Dow Jones Industrial Average November Scorecard:

Date	Close	Gain/Loss	Cum. G/L
11/1/18	25,380.74	+264.98	+264.98
11/2/18	25,270.83	-109.91	+155.07
11/5/18	25,461.70	+190.87	+345.94
11/6/18	25,635.01	+173.31	+519.25
11/7/18	26,180.30	+545.29	+1064.54
11/8/18	26,191.22	+10.92	+1075.46
11/9/18	25,989.30	-201.92	+873.54
11/12/18	25,387.18	-602.12	+271.42
11/13/18	25,286.49	-100.69	+170.27
11/14/18	25,080.50	-205.99	-35.72
11/15/18	25,289.27	+208.77	+173.05
11/16/18	25,413.22	+123.95	+297.00
11/19/18	25,017.44	-395.78	-98.78
11/20/18	24,465.64	-551.80	-650.58
11/21/18	24,464.69	-0.95	-651.53
11/23/18	24,285.95	-178.74	-830.27
11/26/18	24,640.24	+354.29	-475.98
11/27/18	24,748.73	+108.49	-367.49
11/28/18	25,366.43	+617.70	+250.21

At the Close, Wednesday, November 28, 2018:
Dow Jones Industrial Average: 25,366.43, +617.70 (+2.50%)
NASDAQ: 7,291.59, +208.89 (+2.95%)
S&P 500: 2,743.79, +61.62 (+2.30%)
NYSE Composite: 12,417.63, +229.56 (+1.88%)

GM To Lay Off 14,000; Stocks Stumble To Gains

With news that General Motors (GM) would lay off 14,000 workers and shut down five plants, the mood on Wall Street at the opening bell was more than a little bit sour. It was just the kind of news that the market didn't want to hear, especially after some smashing numbers from Black Friday retail sales and even more good news from Cyber Monday's online commerce.

The Dow sank more than 200 points in the first half hour of trading, but from there took the path of least resistance, to the upside, extending Monday's rally with a little hiccup from some morning indigestion. While the Dow posted a fair gain, the other indices didn't do much, with the NASDAQ and NYSE Composite barely making it above unchanged. The S&P shook out some shorts for a third of a percent win.

Everything else was pretty ugly. Oil posted a minor gain, though there are few in the real world who believe the selloff in crude - as with stocks - is over. Precious metals were slammed close to recent lows and seem to have no ballast, the past three months nothing but a rollover and consolidation with a focus to the negative. The metals can't break to the upside as long as every other asset class is struggling; the current logic dictating that stocks must regain a positive footing and absent that, nothing else matters.

Today's trade was mostly noise. Nothing really moved the meter and it was a little bit of a surprise that stocks rallied as well as they did. Stocks remain week and investors weary. While that's a solid formula for further declines, the day-trading flogs and HFTs have managed to keep stocks from completely folding up their tents. That, and a healthy dose of holiday cheer should keep things stabilized... until they're not.

Dow Jones Industrial Average November Scorecard:

Date	Close	Gain/Loss	Cum. G/L
11/1/18	25,380.74	+264.98	+264.98
11/2/18	25,270.83	-109.91	+155.07
11/5/18	25,461.70	+190.87	+345.94
11/6/18	25,635.01	+173.31	+519.25
11/7/18	26,180.30	+545.29	+1064.54
11/8/18	26,191.22	+10.92	+1075.46
11/9/18	25,989.30	-201.92	+873.54
11/12/18	25,387.18	-602.12	+271.42
11/13/18	25,286.49	-100.69	+170.27
11/14/18	25,080.50	-205.99	-35.72
11/15/18	25,289.27	+208.77	+173.05
11/16/18	25,413.22	+123.95	+297.00
11/19/18	25,017.44	-395.78	-98.78
11/20/18	24,465.64	-551.80	-650.58
11/21/18	24,464.69	-0.95	-651.53
11/23/18	24,285.95	-178.74	-830.27
11/26/18	24,640.24	+354.29	-475.98
11/27/18	24,748.73	+108.49	-367.49

At the Close, Tuesday, November 27, 2018:
Dow Jones Industrial Average: 24,748.73, +108.49 (+0.44%)
NASDAQ: 7,082.70, +0.85 (+0.01%)
S&P 500: 2,682.20, +8.75 (+0.33%)
NYSE Composite: 12,188.06, +6.46 (+0.05%)

Monday's Big Bounce Sets Up For Extended Short-Term Rally, Continued Volatility

After last week's bloodletting, it was no surprise that bargain hunters emerged to open the week's trading, sending the markets through the roof right at the open and holding gains throughout the session.

With a four percent loss booked for the prior week, Monday's 1.5-2.0% gains amount to little more than a technical snap-back rally off some very fresh and very dangerous new lows. Early indications from brisk Black Friday weekend sales were the most likely catalyst for Cyber Monday buying, a reflection of what may be considered a robust economy backed by consumers with full wallets and plenty of room to spare on credit cards.

While the Fed has been tightening over the past two years, banks, credit card operations, and shadow banking entities have been cranking up the credit spigots, loosening lending standards and making more money available via an array of personal loans, small business offerings, refinancing, consolidations and other assorted credit vehicles. There certainly is no shortage of easy money in the consumer and small business space, nor in the higher levels of corporate finance.

Add to the consumer and business conditions wide-open spending by governments at all levels and the US economy appears robust, dynamic and unflinching. Never mind that the Fed is threatening to take away the punch bowl. There are more than enough willing participants and suppliers of easy money, many of them spring the mix with added enticements.

There are crosswinds in the capital markets which lead to wild swings in every manner of asset. The flavor of the day may change, but the underlying theme of easy money has not yet left the room. America is in a period that rivals the roaring twenties, the nifty sixties and even the greed-is-good nineties.

The party goes on until the elixir of fast, easy money is taken away, and that's not happening any time soon. Expect even more volatility through the holidays and into the new year.

Dow Jones Industrial Average November Scorecard:

Date	Close	Gain/Loss	Cum. G/L
11/1/18	25,380.74	+264.98	+264.98
11/2/18	25,270.83	-109.91	+155.07
11/5/18	25,461.70	+190.87	+345.94
11/6/18	25,635.01	+173.31	+519.25
11/7/18	26,180.30	+545.29	+1064.54
11/8/18	26,191.22	+10.92	+1075.46
11/9/18	25,989.30	-201.92	+873.54
11/12/18	25,387.18	-602.12	+271.42
11/13/18	25,286.49	-100.69	+170.27
11/14/18	25,080.50	-205.99	-35.72
11/15/18	25,289.27	+208.77	+173.05
11/16/18	25,413.22	+123.95	+297.00
11/19/18	25,017.44	-395.78	-98.78
11/20/18	24,465.64	-551.80	-650.58
11/21/18	24,464.69	-0.95	-651.53
11/23/18	24,285.95	-178.74	-830.27
11/26/18	24,640.24	+354.29	-475.98

At the Close, Monday, December 26, 2018:
Dow Jones Industrial Average: 24,640.24, +354.29 (+1.46%)
NASDAQ: 7,081.85, +142.87 (+2.06%)
S&P 500: 2,673.45, +40.89 (+1.55%)
NYSE Composite: 12,181.60, +145.36 (+1.21%)