Weekly Market Assessment
Well well well, to no surprise the Federal Reserve decided not to raise rates on Thursday. Their reason, none other then what I have been saying so many times before, they are struggling to create inflation. They have now extended their date to reach their inflation target to 2018! Now, that doesn't mean that they will not raise rates until then but once we have some signs that inflation is improving, could give them the confidence to make the move and raise rates. So how did the market react to this decision to postpone the hike, a 300+ point sell off as investors took this news as a sign that the economy was weakening. This can be argued however with continued low rates and a negative reaction in the market will only further provide longer accommodative monetary policies. The markets crave lower interest rates as a way for companies to pursue acquisitions, cheap financing for future projects and a way to fund the purchases for share buybacks among many other things. So for now we wait till the next meeting to see what reason they come up with for not making the decision to hike rates.
So why was September more important than all the other Fed meetings. I don't think it was, I think the market and the media build up every single meeting as the "biggest and most important meeting of the year!" They seem to always forget that the Federal Reserve has a dual mandate, that is maximum employment and price stability. The price stability or inflation rate is the one leg of the mandate that is not coming close to their 2% target, which is stated in all prepared remarks as, "inflation continues to run below our longer run objective." Now, could inflation spike without the market knowing it. No, one just has to look at a group of commodities and realize that prices still remain in a somewhat free-fall. Along with inflation concerns, there are also other variables the Federal Reserve must also take into consideration when thinking about raising rates and that is the current market environments that surround us like China and Europe. Stated in President Yellen's prepared remarks was that the Federal Reserve is "monitoring developments abroad." This was the one thing that stood out from everything else. As Former Dallas Fed President Richard Fisher put it, "We cant be responsible as the Central Bank of the U.S. for solving the worlds problems." If things in China or Europe turn around, will the Federal Reserve take another look at their monetary policy decision and if things get worse but inflation rises due to other Central Banks easing policies, where will we stand then? With one Fed meeting left in the year, it looks like we have to watch this movie one more time, only to be disappointed again that the ending hasn't changed!
The Rant: Going Off on a Tangent with My 2 Cents:Making the Watchlist: Below are the stocks that I will be looking at over the coming months. I will provide the the current stock price and why I am watching them. I will comment on them as I continue to keep an eye on them. You will be able to see and follow their growth and/or decline. Chart links may be attached.
See What I'm Trading:You can now view all my real-time trades by following this link, BlackPacific Capital1 and BPC2 This new site shows my trades, in real time the minute they are bought and sold. Below you can also click on the stock symbols, trade strategy or prices which will lead you to this new site. The site offers a full risk/return profile and video detailing the strategy of the trade. Note: When looking at the option positions every contract equals 100 shares.
From the Trading Floor to the Option Pit: A quick look at whats on the trading desk:
S&P 500 (SPX) -No Trades.
GoPro (GPRO) - After breaking down on Monday after an article in Barrons that with increased competition GPRO could sink to $25 a share. GPRO sold off over 4%. The following day, CEO Nick Woodman came on CNBC to discuss how competition is actually bringing more awareness to GPRO and with that it has actually increased its market share and that GPRO has many more products in the works that go beyond the camera. I have purchased common shares at $33.55. I have also sold a short term Iron Condor at $37/38 and 32.50/31.50.
FireEye (FEYE)- I bought a SEPT4 38 "CALL" last week and sold it today for a 36% gain. I have now gone out to OCT1 $38.50 and 39.50 "CALLS