Today will be an interesting follow-up case study in how central banks impact markets.
Late in yesterday’s session in the US equity markets, there was enhanced discussion of the prospects for a major Fed rate cut, which propelled share prices up +230 points in the Dow 30 Average.
This morning the Bank of England and European Central Bank will announce their policy decisions. Then the spin will continue with respect to what the Fed may or may not do.
Rate cuts come when economies slow, banks face liquidity problems and/or the equity market falls. I think the latter is the primary reason.
Every time the market falls, Wall Street personalities start screaming that the problems are on account of the Fed. It’s always the Fed mistakes, they say.
This is just a pressure tactic as the Fed did not create the fiscal and economic ills of the nation. Credit government and HB&B on that score.
At 7:00am ET, the BoE announced they would hold the rates unchanged. The British Pound gained +0.3 pct, but the FTSE sold off. Blame the central bank !!
I see that Britain’s former Prime Minister Tony Blair is now on the payroll at JP Morgan. Nice payback. I guess we’ll see George Bush heading over to Goldman Sachs at about this time next year.
We’ll be talking about today’s multiple reports of US Retail sales for December and the 4Q. The data, which is just now coming in at 7:00am ET, is expected to be soft, possibly the worst in several years. There will be spin about the exclusion of gift card sales. But, traders, I think, get the picture.
Limited Brands (LTD) Dec same store sales was just reported, down -8 pct, and -14 pct for the five weeks ended Jan 5.
The Buckle (BKE) Dec same-store sales were up +18.7 pct. Wow!!
Pacific Sunwear (PSUN) Dec same-store sales were down -2.8 pct.
Cato (CTR) Dec same-store sales were down -8 pct.
Bebe Stores (BEBE) same-store sales were down -7.9 pct for its fiscal 2Q.
Zale (ZLC) Nov and Dec same-store sales were down -9 pct.
Chico’s (CHS) 5-week holiday sales down -5.6 pct.
…. Going to be interesting trying to answer the question, “Where have the customers gone?”
Well, maybe the customers are Mon & Pop who didn’t pull down a few million in 2007 year-end bonuses for their terrific job as HB&B Managing Directors.
The President’s mission in the Middle East to promote peace is another factor pushing up prices. Prices up with the hype, down later with the reality.
Have a great day. I enjoy the discourse. Much of the day I will be in meetings though.
