Yellin Still has Bulls Yelling! Hi Everyone, The stock market closed modestly higher today, with both the Dow and S&P 500 again reaching records. Investors appeared to think that Janet Yellens comments suggest she will continue the Feds aggressive stimulus. Tempering the gains, though, were weak guidance from Cisco (CSCO) and a lower earnings forecast from Wal-Mart (WMT). The Dow rose 55, or 0.4%, to 15,876. The Nasdaq gained 7, or 0.2%, to 3,973, while the S&P 500 advanced 9, or 0.5%, to 1,791. Advancing issues outnumbered decliners by a nearly 2-to-1 ratio on the NYSE, where volume remained light. Traders think that Janet Yellens testimony before the Senate Banking Committee drove the stock market higher today. As one trader explained, Her statements confirmed investors belief that she is unlikely to end the Feds aggressive stimulus within the next the few months, encouraging investors. In other words, the Fed is likely to continue to spike the punch bowl, rather than take it away just as the party is getting good. Ms. Yellen was emphatic: She said in testimony before the Senate Banking Committee that she would not end support for the fragile recovery and that tools other than the current near zero interest rates remain limited. Yellen also said that she does not see a stock-market bubble, despite the markets multi-year rise. Many investors question whether the Fed is the only factor driving the stock market higher. Of course, it is not; fundamentals like earnings still matter. But the Fed is keeping the economy moving forward and enabling companies to cut expenses and grow revenue and earnings. Today, however, despite some disappointing guidance from market bellwethers like Cisco and Wal-Mart, and stubbornly high initial unemployment claims, investors decided not to fight the Fed. Stocks rocked once again today, as the love fest for the Feds new chief moved into overdrive, and the stock market basically confirmed Janet Yellen ahead of the U.S. Congress. The stock market rallied nicely today, and with the anger Congress is facing, you probably will not see any member of Congress doing anything challenging or controversial in the lead up to Janets confirmation. She promises more of the same, and that seems fine with investors. Yellen is smart, and her Berkeley pedigree proves that, but the big concern is how she will react in a crisis. Bernanke was a big academic too, and he was questioned early on whether his lack of Wall Street credentials might be a problem. Seeing the S&P 500 rise by nearly 170% in five years sort of gives any Fed Chief a thumbs up, so we will just have to wait and see how this plays out with Chairman Yellen. It looks good for her right now, though, which is a plus for the stock and bond markets. The 10-year Treasury yield has edged back above 2.7%, but there is certainly no panic about Janet Yellen. This is huge for the economy and the stock and bond markets because it means that the status quo stays in place, and that no one is in a rush to raise interest rates anytime soon. This is why stocks continue to rock and roll higher. The key with Yellen is the continuity factor, which says that NO ONE wants to rock the boat right now. ObamaCare might be creating a lot of stress, but the broader economy is still basically improving. It is still a slow recovery, but it is somehow a recovery nonetheless. Look for Janet to get approval, and look for the stock market to continue to rise. She is committed to easy money, and easy money continues to lift ALL of the boats. Have a great evening, Joe Joseph Esposito The Pinnacle Financial Group LPL Registered Representative Branch Manager T: 516.763.9700 F: 516.763.9706 Joseph.Esposito@lpl The highest compliment you can pay me is to refer a friend. Those who die without life insurance should be made to come back to see the mess theyve created. (Will Rogers)
Posted on: Fri, 15 Nov 2013 02:13:40 +0000
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