Slower Week Begins, Keurig Goes Private

Stocks are indicated in today’s session modestly in the red on an otherwise light-news day. This would follow the strong Friday session in response to the solid November jobs report.

The strong jobs report removed the last potential hurdle that could have held the Fed back from announcing a rate hike at its mid-December meeting. The market’s positive response reconfirms that investors have found their peace with this Fed outlook. Driving this sanguine view appears to be the realization that lift-off is essentially a vote of confidence in the U.S. economic outlook, which is reassuring given the all-around uncertainty about the global economy.

Importantly, the Fed has been able convince market participants that it will remain slow and deliberate in interest rate hikes beyond the mid-December lift-off. This non-threatening view of future Fed policy took hold in the last few weeks, helping stocks recoup most of the early-Fall losses.

The Fed is the only major central bank that is getting ready to start tightening policy; all other major central banks remain in easing mode, with the European Central Bank just having announced expansion of its bond-purchase program late last week. It is this divergence in monetary policy between the U.S. and its trading partners that has pushed the dollar to multi-year highs against Europe’s common currency, the Japanese Yen and a host of other major currencies.

The strong dollar has been a big factor in holding back the economy’s export-centric sectors and weighing on corporate earnings in recent quarters. Managing the dollar’s rise will be a major challenge for the Fed as it embarks on its tightening policy in the very near future.

In corporate news, Keurig Green Mountain (GMCR – Analyst Report) has agreed to be taken private in a roughly $14 billion deal that represents a huge premium to the stock’s Friday close. While Keurig shares are up big today, Chipotle (CMG – Analyst Report) shares are down on the back of weak guidance for the current period as a result of an e.coli outbreak.