The stock indices are up and the fear goes down. Vix is down 4,7%, trading at 12,92. People are bullish and now it is time for the companies to deliver. The sentiment is still very high, so it will be interesting to see the companies economical numbers and their earnings growth.
2013 was an extremely good year in the stock market, but I don`t think 2014 is going to be the same. We did not see a big correction last year. It all went up. But this year will probably be different. It is headed for some corrections and this year will be more volatile than last year.
Three rounds of QE have helped the indices to increase and reach a new all time high. The S&P 500 is up 173% from its twelve-year low in 2009. Janet Yellen will replace Ben Bernanke as a FED chairman on Jan 31. Janet Yellen won Senate confirmation (56-26 votes) to become the 15th chairman of the FED.
The Nasdaq Biotechnology Index is up 1,4%. Health-care shares in the S&P 500 is up 0,3% in 2014, and this is the most among the ten main industries. Investors are waiting for the Fed minutes today, and news about the job report on friday. This is important news that can drive the market.
Today, we will know what outgoing Fed Chairman Ben Bernanke really want to do with the gradual tapering of $10 billion a month. Today`s minutes will tell us that this was a narrower view to some few FOMC members or not.
Follow the oil price now. This is a risky bet. The oil price can plunge and Opec can face huge problems. If this is the scenario, I think it will be very good news for the U.S consumers. Who want cheaper gasoline?
Middle East is the key and U.S Secretary of State John Kerry are working with difficult cases like Shia-dominated government in Baghdad, the Islamic State in Iraq and al Sham (ISIS), Al Qaeda’s fast-growing franchise operating in Syria, Sunni groups marginalized by Iraqi Prime Minister Nouri al Maliki’s authoritarian policies, Egypt, Tunisia and energy producers like Nigeria, Venezuela and Russia.
I mention this because it all affects the oil price, and what`s happend in this areas can change the game very fast. This is a big risk in 2014. So, the happenings can drive the oil prices up or down. It depends on whats happening?
The unemployment data from EU yesterday was disappointing. In Italy the unemployment rate is at the all-time high of 12,6% (for November), and for the broader EU unemployment, the rate is now at 12,1%. Just below its record 12,2%. The unemployment rate is U.S is just above 7%.
It looked like we had a game changer in November – December last year, but take a look at the chart below. CRB have turned around and are still declining. It is below 50 MA and I will wait for this to turn up again.
New today: ADP Non-Farm Employment Change at 8:15am, Crude Oil Inventories at 10:30am, 10 Year Note Auction at 1:01pm, FOMC Meeting Minutes at 2:00pm.
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