The Fed Day

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Yesterday was Fed Day. The FOMC released its statement yesterday, there was no press conference, and was no change; interest rates unchanged, outlook unchanged. Policy makers reiterated their expectations for moderate economic growth, “some further strengthening” in the labor market and a return to 2 percent inflation.

Policy makers in December penciled three rate hikes into their 2017 forecasts and there was nothing in yesterday’s statement that would indicate a change from that course. Wall Street tries to read between the lines, and the absence of a more hawkish tone was interpreted as dovish; the thinking is that if the Fed really wanted to hike rates 3 times this year, they would have given us a hint.

Of course, the Fed policymakers could still have plenty to say in their speeches over the next few weeks, but for now, the implied or maybe just imagined tone is dovish.

The VIX, the volatility index, is hovering near multi-year lows and intraday, there was a little flash crash that momentarily sent the VIX under 10, which is a level we haven’t seen for about 10 years. The dollar index briefly flirted with the 100 level but that didn’t last. The dollar was mildly higher at 99.6. the dollar suffered its worst January on 3 decades.

ADP reports private-sector hiring picked up in January, as employers added 246,000 jobs, well above expectations. This was the fastest pace of job growth since June. Manufacturing added 15,000 jobs in January, the most since December 2014. Economists use ADP data to get a feeling for the Labor Department employment report, which will be released Friday and covers government jobs in addition to the private sector. Jobs are the most important economic indicator there is.

If this is improving, then the economy is improving. If the economy improves, earnings have more visibility. That can grab investors off the sidelines that had been worried about valuations.

The Institute for Supply Management (ISM) said its index of manufacturing activity rose to 56.0 last month from December’s reading of 54.5. That was its highest level since November 2014. A reading above 50.0 indicates expansion in the manufacturing sector, below indicates contraction.

The ISM indicated that the survey suggested that the overall economy had grown for the 92nd consecutive month. The new orders index rose to 60.4 in January from 60.3 a month earlier. The employment index advanced to 56.1 last month from the prior 52.8 and compared to forecasts for an increase to 53.1. There was also a big pop in the prices index.

The U.S. Census Bureau reports construction spending in December 2016 was estimated at a seasonally adjusted annual rate of $1,181.5 billion, 0.2 percent below the revised November estimate. The December figure is 4.2 percent above the December 2015 estimate. The value of construction in 2016 was $1,162.4 billion, 4.5 percent above spending in 2015.

Facebook (FB) reported a blockbuster fourth quarter, with $8.81 billion in revenue and 1.86 billion monthly active users and 1.23 billion daily active users. The company managed to beat growth expectations across the board, despite concern that it’s running out of room to place ads in the News Feed.

Facebook made an average of $4.83 in revenue per user, globally, over the last quarter. In the US and Canada, where disposable income is high and Facebook is well-established, each user was worth $19.81. Part of the company’s success is its ability to make more and more money off its existing users. Ad revenue shot up 53% over the quarter.

It wasn’t all sunshine and daffodils: a Dallas jury has ordered Facebook to pay $500 million in damages for a lawsuit that claims its Oculus VR subsidiary was based on stolen tech. The money will go to game maker Zenimax, who filed the lawsuit against Oculus in 2014. Oculus wasn’t found guilty of stealing trade secrets from Zenimax, but the jury did find that Oculus co-founder Palmer Luckey violated a signed non-disclosure agreement.  Facebook says it will appeal.

Volkswagen (VLKAF) will pay at least $1.26 billion to fix or buy back nearly 80,000 polluting 3.0-liter diesel-engine vehicles. And the automaker could be forced to pay up to $4.04 billion if regulators don’t approve fixes for all vehicles.

New York Attorney General Eric Schneiderman filed a lawsuit that accuses Charter Communications Inc’s Spectrum cable unit of short-changing customers on internet speeds.

Pipeline company Oneok Partners LP’s biggest shareholder Oneok Inc (OKE) said it would buy the rest of the company for $9.3 billion.

The acquisition of Rite Aid (RAD) by Walgreens (WAG) is being opposed by a union representing about 6,000 Rite Aid workers. The union said the two drug store chains don’t go far enough to address antitrust concerns.

Roche’s profit got a kick from drugs. The Swiss pharma company reported 8% profit growth in 2016 over the year before, thanks to robust sales of its medicines and diagnostic tools. Roche is bracing for the financial impact of copycat versions of its two best-selling cancer drugs.

Anthem (ANTM) reported adjusted quarterly profit of $1.76 per share, beating estimates by 15 cents, while revenue also beat forecasts. Anthem said it ended 2016 with better-than-expected enrollment.

Tupperware (TUP) reported adjusted quarterly profit of $1.45 per share, 8 cents above estimates, despite a revenue miss.

Marathon Petroleum (MPC) reported quarterly profit of 43 cents per share, well above estimates of 26 cents, and revenue also beat forecasts by a wide margin. Marathon’s results were driven by strong performances in its refining and transportation units.

Electronic Arts (EA) earned an adjusted $2.58 per share for its latest quarter, beating estimates of $2.30. Revenue also beat forecasts, helped by strong sales of the video game maker’s “Battlefield 1.”

Amazon (AMZN) will invest about $1.5 billion in an air cargo hub in northern Kentucky, planning to employ 2,700 people and eventually house 40 Amazon Prime Air planes there.

Some 15.4 million consumers were victims of identity theft or fraud last year, according to a new report from Javelin Strategy & Research. That’s up 16 percent from 2015, and the highest figure recorded since the firm began tracking fraud instances in 2004. In all, thieves stole $16 billion, the report found — nearly $1 billion more than in 2015.

A law allowing Prime Minister Theresa May to trigger Britain’s exit from the European Union cleared its first legislative hurdle today, paving the way for the government to launch exit talks by the end of March. The UK parliament passed a law giving Prime Minister May the right to trigger Article 50 of the EU’s Lisbon Treaty – the legal process for leaving the bloc – after the Supreme Court ruled last week that she could not take that decision unilaterally. The vote authorizes Theresa May to begin the withdrawal process, which she has indicated she will do by the end of March, 2017.

Last night President Trump announced Neil Gorsuch as his nominee for the Supreme Court to replace the late Justice Antonin Scalia. Today, Trump encouraged Senate Majority Leader Mitch McConnell to use the “nuclear” option to help get Gorsuch confirmed to the Supreme Court if Senate Democrats decided to filibuster his nomination.

If Democrats filibustered the nomination, Gorsuch would need a super-majority of 60 votes to be confirmed in the Senate. Republicans currently control 52 seats. The nuclear option would rewrite Senate rules and only require a majority for confirmation.

President Trump’s national security adviser, Michael Flynn says the administration is putting Iran “on notice” after it tested a ballistic missile, although he did not elaborate on what that meant.

Rex Tillerson, the former chairman and CEO of ExxonMobil has been confirmed to become the nation’s 69^th Secretary of State.

The Acting Secretary of the Army has directed the Army Corps of Engineers to issue the final permit needed by Energy Transfer Partners to finish the Dakota Access oil pipeline.

One year ago, today, the World Health Organization declared the mosquito-borne virus known as Zika an international public health emergency. Zika is no longer classified as a crisis, but new infections are still present around the globe. The WHO said in a report, saying, “Overall, the global risk assessment has not changed,” and warning that vigilance worldwide must remain high.