THURSDAY 12/18/14; Fed Aftermath; Cascading Global Rally; ACN; RAD; PMI Services; Philly Fed; Leading Indicators; US Stocks Explode Higher in Yellen Rally; CTAS; NKE

The Fed keeps the “considerable time” phrase in the FOMC statement that references when the first rate hike will occur. This creates a huge stock market rally in the US since the Fed is in no hurry to raise rates. At the same time, the Fed adds a “patience” statement that originates from Fed Greenspan’s days which typically means the first rate hike will occur in six months which is June-July 2015. Further, in the Q&A session, Fed Chair Yellen says the FOMC will not raise rates for the next couple meetings and clarifies to say ‘couple’ means ‘two’. This opens the door for an April 2015 rate hike earlier than the consensus expects.

The Fed wants it both ways. The bottom line is that the Fed left the considerable time phrase in the statement so that negates the April to June target for the rate hike and maintains the ongoing projection that the rate hike will occur from June-July 2015 or later and creates the stock market rally. The Fed tried to use worlds to create a hawkish tone but by balking at removing the considerable time statement is instead professing ongoing dovishness. The confusion will continue into the next meeting on 1/27/15 and 1/28/15 where traders will be watching to see if the considerable time phrase is completely removed or not. When considerable time is removed the first rate hike is definitely on tap in six months or sooner.

The central bankers control the markets. This is what modern day capitalism has descended into; a group of Fed members dictating the ongoing directional moves in markets. It is absolutely shameful. The free market principal has become a joke. The Fed has nine meetings scheduled for 2015 the first in January, then 3/17-18/15, then 4/28-29/15, then 6/23-24/15. Yellen says the first rate hike would not occur for two meetings which targets 4/29/15 as the first potential date for a rate hike but as explained above, the market expects summer 2015 or later which creates an ongoing bid in the stock market.

Asian markets feed off the US rally 








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The 2-10 spread is 158 bips and the 5-30 spread is 116 bips.

There are over 30 million adult American men between 25 and 54 years old that are underemployed or unemployed. As today’s stock market action illustrates, the Fed’s easy money policies reward the rich that own stocks and ignore the disadvantaged. The wealthy elite are raping the upside in stocks courtesy of the Fed. The rich become richer high-fiving each other while laughing at the common people that do not own stocks and suffer through structural unemployment.

The Fed has created two America’s that will lead to future social unrest. For now, if you are wealthy, it is time for a steak dinner, wine and song. If you are a ‘have not’ that is too bad; enjoy your franks and beans and do not look for help from the Fed, government or Chair Yellen; she is too busy dining with the banksters this evening. The two-day Fed-induced Yellen Rally rewards the wealthy with a +5% gain in their portfolios.