Here are some things that might come up;
- Every one wants to know if we will have a year-end rally? The S+P 500 is up about 80 points in a very short time, this is the rally. The question should be how long can it last. Coming into Wednesday the US market had been up 14 our of 18 days. Clearly the market is overbought to some degree. Overbought markets can always get more overbought, of course.
- The market has a stunning track record for being up on black Friday, to pick otherwise would be 100% guess.
- The last time I was on the show Mandy asked what fundamentals could cause a rally, my reply was the market could rally for no reason at all but from a fundamental perspective a drop in oil would likely be the only catalyst. Clearly some part of the rally is attributable to oil's drop in price.
- The ten year treasury is around 4.46%. It has almost corrected down to what I thought could be a low. The news about the Fed minutes was taken as very important by equities and the two year treasury. The move in the ten year was less significant. I take this to mean that a move down in yield from here could only happen with a new event that the market is not now discounting. Yields will either go up or the curve will invert. Both pose headwinds for equities for 2006.
- I have no doubt that holiday spending will be just fine. I don't know about blow-out numbers but it won't be bad. What I wonder about is to what extent gift cards will dampen sales. When gift cards are sold they are not recognized as revenue. That happens when they get redeemed. Until they are redeemed they are counted as being a liability. The convenience factor may make for a good January for the retailers.
- There has been a lot of chatter about the narrowing breadth of the rally as being a cause for concern. If everyone is talking about it, it's priced in and won't be that important. When too many people take the same side of an issue, that issue has less predictive value.