Fed Open To More Experiments

“Central banks should consider the possibility of keeping larger balance sheet, or using negative interest rates, to provide stimulus when needed. SF Fed John Williams 

Governor Williams made this comment after the market close on Friday. In ordinary times, this would be shocking, but this isn’t your father’s Fed, now is it? I thought not.

Rumors are floated around suggesting the Fed will raise interest rates slightly and combine this with QE4 perhaps.

After all economic data remains crappy overall. Today’s economic release features Chicago Activity Index, still low, but only slightly better at 0.04 vs prior –o.37; Existing Home Sales fell -3.7%; and, PMI Manufacturing Index Flash plunged to 52.6 vs 54.4 expected & prior 54.

Pfizer (PFE) and Allergan (AGN) decided to hook-up which will allow the combined companies to locate overseas saving on corporate taxes. This prompted angry comments from some politicians but it strikes me those complaining would do better to understand why US tax policies are causing this and fix it.

Market sectors moving higher included: Small Caps (IWM), Biotech (IBB), Energy (XLE), Consumer Staples (XLP), Retail (XRT), Crude Oil (USO) and not much else.

Market sectors moving lower included: Financials (XLF), Industrials (XLI), Utilities (XLU), Tech (XLK), Europe (IEV), Eurozone (EZU), EAFE (EFA), UK (EWU), Emerging Markets (EEM), Japan (EWJ), China (FXI), Australia (EWA), India (EPI), Asia ex-Japan (AAXJ), Taiwan (EWT), Hong Kong (EWH), Brazil (EWZ), Mexico (EWW), Gold (GLD), Silver (SLV), Base Metals (DBB), God Stocks (GDX) and many more.

The top ETF daily market movers by percentage change in volume whether rising or falling is available daily.

Volume was ultra-light as many may be taking the shortened Holiday week off to get their camping spot in front of retailers for Black Friday. Breadth per the WSJ was mixed overall.

The Keynesian experiments continue and who knows what else will emerge from their laboratory.