But wait. If they'll do what the author least expects, doesn't that mean they'd do what he MOST expects? And that is to do what he doesn't expect. Which is . . . ?? This is making my head hurt.
One good thing about the headline. The author can't possibly be wrong!
Markets will now do what you least expect
Why markets will do what you least expect after that interest-rate hike
Published: Dec 17, 2015 9:07 a.m. ET
By VICTOR REKLAITIS
MARKETS WRITER
Marketwatch.com
They’ve finally gone and done it, and now Jeff Gundlach might win the prize for the most colorful reaction to the Fed’s big decision.
The bond guru is going around saying the interest-rate hike reminds him of George W. Bush’s infamous 2003 appearance in front of that “Mission Accomplished” banner.
In other words, the rate hike is premature. “I think Janet may have jumped the gun on ‘Mission Accomplished,’” the DoubleLine Capital founder told CNBC late Wednesday. He made that same link to Dubya’s controversial photo-op last week, and Gundlach had been saying the stock market can’t handle a rate rise, so it’s no surprise he’s taking shots at Yellen & Co. after yesterday’s decision to hike.
At the other end of the spectrum, a BlackRock portfolio manager is among the many folks suggesting the Fed shilly-shallied too much before acting. In “waiting as long as it has to begin rate normalization,” the central bank may have ended up hiking just as “domestic growth appears to have potentially crested,” said BlackRock’s Rick Rieder, according to a Wall Street Journal report.
Another common reaction is that the Santa Claus rally is now coming for real. That view sees the S&P 500 SPX, -0.98% galloping into New Year’s Eve, as the dollar UUP, +0.59% strengthens and commodities DBC, -1.01% keep crumbling. “Our expectation is that the lifting of the veil of uncertainty will pave the way for an end-of-year gain in share prices,” says S&P Capital IQ’s Sam Stovall in a note.
But don’t be so quick to believe completely in Santa, says our call of the day. Yes, things might look good in the near term for the S&P, but don’t be surprised to see the dollar weaken and commodities and emerging markets EEM, -0.60% rally, says that view. On a far more downbeat note for emerging markets, the chart of the day highlights an EM currency that’s set to fall hard.
Key market gauges
S&P 500 ESZ5, -0.49% and Dow futures YMZ5, -0.36% are pointing higher after yesterday’s Fed-fueled, 224-point gain. European stocks SXXP, +1.46% are up sharply, and Asia ADOW, +0.68% closed with gains. It was looking like another tough day for oil CLF6, -1.38% after an inventory rise, but it’s turned positive in recent trading. Gold GCG6, -2.11% is falling as a key dollar index DXY, +0.37% jumps.
Precious metals, other commodities and emerging markets are “at the very least attractive mean reversion candidates” after having “taken the brunt of this extended normalization.” So says investor and blogger Erik Swarts over at Market Anthropology, arguing in favor of “counterintuitive” outcomes as the Fed says “see ya” to ZIRP. (Mean reversion refers to returns eventually moving back toward their average rate, with big winners becoming losers and big losers turning into winners.)
He argues the dollar “should weaken” in a buy-the-rumor, sell-the-news move. He sounds bullish on the S&P 500 — not exactly contrarian — but he is also upbeat on beaten-down gold miners. The chart above from Swarts shows how he thinks the miners GDX, -5.26% could pivot “toward more benevolent market conditions” like banks KBWB, -0.83% did several years ago. In the chart, banks are represented by BKX BKX, -1.07% — the KBW Nasdaq Bank Index.
“It has been my pleasure and my honor to represent you all, the fans, for as long as I’ve been able to. ... The future is so bright. These women are going to kill it.”—soccer star Abby Wambach last night after her final game with the U.S. national team, which was defeated 1-0 by China.
The stat
3 — That’s the number of key United Continental execs with “acting” before their titles. The airline has an acting CEO, acting CFO and acting general counsel, notes a Journal story about how the carrier’s “leadership has been in flux” since its longtime CEO’s ouster in September. United’s stock UAL, -0.87% is down 4.4% over the past three months, while the U.S. Global Jets ETF JETS, -0.63% — a broad air-travel play — is up 2.9% over the same period.
The buzz
In Washington, there’s chatter over Defense Secretary Ash Carter apparently using his personal email for some official business.
Oracle ORCL, -4.60% is lower premarket even after earnings beat late Wednesday, and Pier 1 PIR, -18.99% is tumbling after its report. Jabil Circuit JBL, -1.55% is gaining after revenue jumped 14%, and FedEx FDX, +2.92% is also higher following its report.
Known for its wild moves, KaloBios KBIO, +0.00% plunged 50% premarket before trading was halted pending a Nasdaq request for information. Controversial CEO Martin Shkreli, who also helms Turing Pharma, has been arrested on charges of securities fraud.
Avon AVP, +4.16% is soaring premarket after Cerberus Capital made a $605 million investment that involves spinning off Avon’s North American business. Pandora P, +11.98% is also up sharply after a royalties ruling.
General Mills GIS, -3.90% and Rite Aid RAD, -0.13% are among the companies reporting earnings before the open, with Red Hat RHT, -0.96% among those grabbing the spotlight after the close.
The economy
Beyond more chatter about the Fed decision, we’ve gotten fresh readings on weekly jobless claims (better than expected) and the Philly Fed’s manufacturing index (worse than anticipated). Still ahead is a new figure for leading indicators that’s slated to hit at 10 a.m. Eastern Time.
The chart
The Argentine peso is expected to see its biggest drop since that country’s economic meltdown in 2002. The new government there is lifting its currency controls, hoping to kick-start Argentina’s economy. Watch for the peso USDARS, +13.5151% to go from about 9.8 pesos to the dollar to about 15.
The live MarketWatch chart above is designed to show the latest intraday action by the Argentine peso. It’s starting to show the sharp moves that were expected today, after not budging much earlier. The chart below shows the big move back in 2002.
http://www.marketwatch.com/story/why-markets-will-do-what-you-least-expect-after-that-interest-rate-hike-2015-12-17?dist=lcountdown
Gold is $1,581/oz today. When it hits $2,000, it will be up 26.5%. Let's see how long that takes. - De 3/11/2013 - ANSWER: 7 Years, 5 Months
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