Before the Open (Sep 21)

Good morning. Happy Wednesday. Happy Fed Day.
The Asian/Pacific markets closed mostly up. Japan rallied almost 2%; Hong Kong, Australia, Indonesia, South Korea and Taiwan also did well. Europe is currently up across-the-board. Germany, France, Belgium, Turkey, Spain, the Netherlands and Italy are up more than 1%; Finland, Portugal, Austria and Sweden are also doing well. Futures in the States point towards a moderate gap up open for the cash market.
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The dollar is down. Oil is up; copper is down. Gold and silver are up. Bonds are down.
Today is Fed day. This is what I wrote yesterday…
Unlike most of the post-January meetings, where a rate hike simply was not going to happen, this one is much less of a slam dunk. Most likely they won’t raise, but there’s been increased hawkish chatter, and it feels like the Fed is developing an itchy trigger finger – like they want to raise just to prove they can do it.
I don’t think they will. The odds of them raising in front of an election are small. The odds of them raising when the sitting president is a democrat, the head of the Fed is a women and the leader in the current polls is a female democrat is even smaller. If they raise, the market could tumble, and the odds Hillary wins takes a nosedive. Political statement? I guess you can say that. I’m not biased in either direction. I just don’t think the Fed wants to be held responsible if Hillary doesn’t win. Hence why I think they’ll stand pat.
They, of course, can’t say this. They’ll say something about the employment situation and inflation because those comprise their dual mandate. But the real reason is the ECB’s decision not to commit to new stimulus (the Fed is scared of adding fuel to a potential brewing fire) and the market’s recent weakness (yes the Fed watches the stock market, and yes they are terrified it might drop).
Let’s assume “no rate hike” is priced into current prices. If they don’t raise, the reaction is a tough call. I can see a relief rally (Wall Street being thankful), but I can also see a “sell the news” situation because the news is already factored in. I can also see a relief rally followed by a move down (remember, the market often moves one way on Fed day and then the other the next day).
If the Fed unexpectedly raises, it’ll be Katie-bar-the-door – the market will tank.
The next Fed meeting is Nov 2, a mere 6 days before the Nov 8 election. No way they do anything with rates that close to election day.


Which makes me wonder. If there’s already increased chatter about a rate hike, will waiting until the Dec 14 meeting cause there to be too much pent up energy in the pipeline, such that they’ll have to raise too much at once or raise several meetings in a row? We’ll see.

Stock headlines from barchart.com…
Microsoft (MSFT -0.21%) rose over 1% in pre-market trading after it raised its quarterly dividend by 3 cents to 39 cents and authorized the byback of an additional $40 billion of stock on top of an existing $40 billion repurchase program.
Cooper Cos. (COO -1.09%) gained 1% in after-hours trading after it was announced that it will replace Starwood Hotels & Resorts in the S&P 500 Index at the close of trading on Thursday, September 22.
SPS Commerce (SPSC +0.78%) jumped over 5% in after-hours trading after it was announced that it will replace Northwestern in the S&P SmallCap 600 at the close of trading on Thursday, September 22.
Adobe Systems (ADBE +0.94%) climbed nearly 5% in pre-market trading after it reported Q3 adjusted EPS of 75 cents, better than consensus of 72 cents, and then raised guidance on fiscal 2016 adjusted EPS to $2.94-$3.00, higher than consensus of $2.87.
KB Home (KBH -2.42%) gained over 3% in after-hours trading after it reported Q3 net orders were up +16% y/y, well above consensus of +2.8%.
FedEx (FDX +0.86%) rose almost 3% in after-hours trading after it reported Q1 adjusted EPS of $2.90, higher than consensus of $2.79.
The Children’s Place (PLCE -1.02%) was downgraded to ‘Neutral’ from ‘Overweight’ at Piper Jaffray with a 12-month target price of $88.
Clovis Oncology (CLVS +12.68%) rallied over 8% in after-hours trading after Janney said there are a “long list” of potential suitors for Clovis.
Airgain (AIRG +10.64%) gained over 4% in after-hours trading after it reported Q2 sales surged +63% y/y to $6.1 million.
CommScope Holding Co. (COMM -0.77%) slid 1% in after-hours trading after holder Carlyle said it sold 10 million common shares of CommScope.
Adamas Pharmaceuticals (ADMS +2.32%) jumped 5% in after-hours trading after the results of a Phase 3 trial of ADS-5102 for the treatment of Levodopa-induced Dyskinesia in patients with Parkinson’s met its primary endpoint.
Nu Skin Enterprises (NUS -1.32%) rose over 3% in after-hours trading after it raised its Q3 revenue view to slightly above a prior forecast of $560 million-$580 million due to success of recent product introductions and “favorable” currency trends.
Mirna Therapeutics (MIRN -0.40%) plunged over 25% in after-hours trading after it said it was closing a Phase 1 study of its MRX34 in melanoma patients due to serious adverse events in patients taking the drug.
Tuesday’s Key Earnings
Adobe (NASDAQ:ADBE) +5.2% AH boosted by subscription sales.
FedEx (NYSE:FDX) +3% AH topping estimates, lifting outlook.
Today’s Economic Calendar
7:00 MBA Mortgage Applications
10:30 EIA Petroleum Inventories
2:00 PM FOMC Announcement
2:00 PM FOMC Forecast
2:00 PM Chairman Press Conference
Today’s Earnings here
Other…
today’s upgrades/downgrades from briefing.com
this week’s Earnings
this week’s Economic Numbers