Riskier assets including the US equity markets reversed course after spending the majority of the day in negative territory. After the FOMC (Federal Open Market Committee) announced that interest rates would remain low for an extended period, the markets moved down, and then crawled their way back into positive territory. The interesting news out of the meeting was that there was one decent. Kansas City Fed President Thomas Hoenig dissented from the decision. A Fed veteran, Mr. Hoenig is concerned the stimulus pumped to fight the crisis may stoke inflation. In a signed that investors are still relatively nervous, the US dollar index, made a 6 month high, and is currently trading at levels not seen since last August.
On the economic front, Japanese exports rose for the first time in 15 months, a further sign of the recovery in global trade. Sales abroad climbed 12.1% y/y in December , well above the 7.6% expected, and compared with a -6.3% drop in November. While the number clearly benefited from the annual comparison as December 08 saw a 35% collapse in exports, the figures still emphasize that Asia is the driving force behind Japan’s, and the world’s, trade recovery.
The US Department of Energy’s report today on inventories has sent a mixed message to the market. While crude oil inventories were relatively bullish in nature, a draw of 3 million barrels, the build in gasoline (2 million barrel build) and heating oil (.4 million barrel build), where negative for products. The gasoline number, will be very negative as inventories are well above the 5 year range. The effect on gasoline, was immediate. Gasoline is currently sitting on support of a long term daily trend line. A close below this level will be very negative for gasoline.
The technology market was happy to greet the announcement of the IPAD tablet from Apple. The company introduced their new product, but what surprised the market was that the price point was relatively low at $499.