*Currency markets and Bitcoin trade 24 hours, the figures here indicate movements between 9am and 4pm ET #1 - Fed leaves rates unchanged, for now
No surprises today from Jerome Powell and the FOMC. They wrapped up their two day meeting and left the the target range for the federal funds rate unchanged at between 2-2.25 percent. In its statement, the FOMC made no mention of the market volatility in October or the rising interest rates that have managed to cool down the bond and housing markets.
Markets yawned at the announcement and didn't veer from their downward trajectory all day. Compared to yesterday's bonfire, today's selloff barely made a ripple.
Why it Matters: The Fed and Powell, in particular, have borne the brunt of President Trump's criticism for raising rates too fast which he says is cooling off a red hot economy and the stock market. But Powell, a Trump appointee later called "loco" by the President among other names, has proven that the Fed's mission is not political or designed to pump up the stock market. The Fed's statement was bland and the only noteworthy point was the comment on the recent slowdown in business spending. Nothing to see here, folks.
What's Next: The Fed will meet again in late December, and is likely to raise the Fed Funds rate another 0.25 percent, according to the CME Group's Fed Watch. According to the most recent data, there is a more than 75 percent chance of another rate hike at the December 19-20 meeting. The market has pretty much baked this into the forecast, but that doesn't mean there won't be a lot of volatility if and when the Fed raises rates again.
For consumers, a higher Federal Funds rate means higher interest payments on everything that is calculated off that rate, like car loans, credit cards and adjustable mortgages. That can hurt consumer confidence and spending, which will show up in the stock market. Count on it.
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Fed Holds Rates Steady, Says Economy Remains on Track
How Do Interest Rates Affect the Stock Market?
The Impact of a Fed Interest Rate Hike #2 - Who's the New Boss at TeslaAs part of Elon Musk's settlement with the SEC for his infamous 'funding secured', tweet back in September, Musk had to relinquish the Chairman's position at Tesla by November 13th. Tesla appointed Robyn Denholm to the post, who is already an independent board of Tesla and the current CFO of Australian telecommunications company Telstra. Read her bio here. photo courtesy of Telstra Why it Matters: It may be a symbolic move, but Musk was forced to make it given his irresponsible behavior that led to the SEC lawsuit. Make no mistake, he's still the CEO and will call the shots, but maybe having a seasoned executive like Denholm in the other corner office will force him to think twice before making irresponsible remarks and picking fights on Twitter. It's not only unbecoming of a company leader, it actually cost shareholders money as shares of Tesla sold off when Musk had to publicly kill the plan to take his company private. It also increased the SEC and Dept. of Justice spotlights on Musk and detracted away from the progress the company has been making on the production lines.
What's Next: Denholm won't assume her new role for another six months as she winds down her duties in Australia. Musk has been relatively tame since he settled the SEC lawsuit for $20 million, but he is unpredictable, to say the least. The Denholm announcement coincided with an analyst report, per CNBC, that implied that Tesla might be included in the S&P 500 in the near future. That's more than a badge of honor. It requires all index funds holders who track the S&P 500 to hold Tesla's stock. That's a lot of index funds!
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Top Tesla Shareholders Chart of the Day: US crude oil slides into bear market territory
The price of U.S. West Texas Intermediate crude oil fell once again on Thursday to hit its ninth consecutive day in the red. In the process, plunging oil prices established a new 7-month low for U.S. crude, placing it at the cusp of bear market territory. Generally defined as a decline of 20% or more from the most recent major peak, entry into a bear market is considered an ominous sign that hints at a negative trend reversal and further potential losses ahead.
The sharp dive in oil prices is attributed to the fundamental combination of increasing supply and potentially decreasing demand. On Wednesday, the Energy Information Administration reported a very hefty increase of 5.8 million barrels in U.S. domestic crude oil inventories against expectations for an increase of only around 2 million barrels. The prior six weeks have also seen several other massive increases in inventories. With both domestic and international output consistently on the rise, and global demand forecasted to decline, the slide in crude oil prices has been no major surprise.
On the chart below, the precipitous fall in oil futures prices is clear. From early October's nearly four-year high at 76.90, crude first fell into a -10% correction and then dropped below its key 200-day moving average in late October. From there, the losses continued on to more than -20% from the early October peak, as of Thursday.
The key question now is whether this sizable drop will turn into a full-blown downtrend for oil prices. Of course, these types of major trend changes are always tough to predict, but generally, over-production and over-supply issues are rarely resolved quickly. As the saying goes, the best cure for low oil prices may be low oil prices. In other words, a falling crude market may simply need to fall further in order to make it less compelling and less profitable for oil producers to continue over-producing.  Enjoy the Market Sum? Share it with a friend. CONNECT WITH INVESTOPEDIA |
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