FED Leaves Rates Unchanged; Cuban Cigar Prices Soar

WSJ Headlines - December 18, 2014

- "Sony Pulls Korea Film; US Blames Pyongyang for Hack"

- "US Stocks Rally"

- "ECB's Coeure Sends a Strong Signal on Stimulus"

- "NYSE Plan Would Revamp Trading - Acting on New CEO's Critique of Markets, Exchange Operator Offers to Cut Costs to Draw Orders"

- "NY Moves to Ban Fracking"

- "Fed Sets Stage for Rate Hikes in 2015 - Central Bank Plans 'Patient' Approach to Tightening Monetary Policy". Patient Approach???

Ok - so what changed? Get a load of this: They just re-arranged the sentence......they said that the Fed would be ' patient' before raising rates while also saying that nothing has changed from earlier 'assurances' that rates would continue to stay low for a 'considerable time'......

Mkts and investors around the globe are all of a sudden ‘accentuating the POSITIVES and eliminating the NEGATIVES’ – Oil Prices stabilize and move higher and Janet Yellen and the FED change a couple of words but leave the story the same – Rates to remain near zero for the foreseeable future. Obama announces that the US will restore full normalized diplomatic relations with CUBA - Cuban Cigar prices soar, and radio stations in Miami revive ‘The Sandpipers’ famous classic Cuban song ‘Guantanamera’ ...("Yo soy un hombre sincero, De donde crece la palma......I am a truthful man from where the palm tree grows....)

Risk was back on Wednesday as the Dow soared 288 points back towards 17,400. The S&P rocketed 40 pts taking that index back up and thru resistance at 2001 – ending the day in solidly higher at 2012.

Huge bargain hunting going on in – guess where? ENERGY. M&A alive and well as APA (Apache Corp) soars by 6.15% after the announcement that Australia’s Woodside Petroleum Ltd has agreed to pay $2.75 bil for stakes in two natural gas projects and one oil project as companies try to figure out how to feed the explosive Asian mkts hungry for natural gas.

The Woodside acquisition of the Apache assets is the first of many ‘deals’ that can be made and highlights how cheap the sector has become. The sudden surge has been building in my opinion and yesterday’s rally was even more significant because the price of crude ended the day Tuesday on the lows – sending what some thought was another ominous message.

As we have been discussing – this move by Woodside and last months move by HAL only highlights the extent to which energy stock prices have fallen in the past couple of months and the opportunities that have been created so now it could get interesting as the sharks circle the prey- the appeal of current prices may just be too much to ignore.

Brent closed above $60 barrel and WTI closed at $56.52 barrel on the back of falling US inventories. (Both are higher again this morning. ) In fact the energy sector as a whole was the BEST performing sector yesterday surging 3.6% as a group. Have investors come to think that oil at $60 barrel is ok? Expect to see oil prices stabilize once the producers realize that it is uneconomic to continue pumping at depressed price levels. But hey – What do I know?

The kicker? Well that was the anticipation of what Janet and the FED would do……and we found out at 2 pm est. They changed the language! Replaced considerable time with patience…but coyly indicated that rates are NOT going anywhere anytime soon. Not really sure what the difference is between 'considerable time' and “patience” is when discussing the normalization of interest rates and Fed’s monetary policy....other than it keeps everyone guessing. The ambiguity remains - some think rates to rise in the spring while others continue to view late summer 2015 as the target - and that was just fine with investors and traders - or was it a good excuse for Fed/dealer banks to force the short squeeze?

She talked about how strong the US economy is but allowed herself the luxury of leaving rates near zero without admitting or denying any guilt whatsoever. In a forecast statement -

"Officials said they expected rates to end up anywhere between 0.375% and 4% by the end of 2016. Within that range, 17 officials project 13 different points of where interest rates might end up".

Good - now that we've cleared that up - we can move on.

And this morning the party rocks on…….US futures are surging once again - currently +21 pts.....taking the S&P back to 2030....Dow Futures +100.....Energy stocks, bargain hunting and short covering will continue to be the theme of the day. Eco reports include Initial Jobless Claims exp of 295k, Cont Claims of 2.43 mil, Markit Services PMI exp of 56.3 and Philly Fed Index of 26. Look for a surge to 2050 on the S&P before this moves runs out of steam.

Overnight in Asia mkts surged on the back of improving oil prices and the clarity brought on by the FED statement. Japan ++2.3%, Hong Kong +1.09%, China -0.11% and ASX +0.95%.

In Europe - those mkts are on fire.....with some up better than 2% on renewed ECB stimulus excitement as well as the confidence in an improving US economy. German IFO Business survey beat the estimates and UK retail sales better than expected. FTSE +1%, CAC 40 + 2.33%, DAX + 2%, EUROSTOXX +2.3%, SPAIN +2.4% and ITALY +1.63%

Cuban Style Pork

In light of the Cuba news - Let's try the Cuban Style Pork Chunks

This is easy to make and easy to serve. For this you need:

Lean boneless pork chops, lime juice, ground cumin, 2 crushed garlic cloves, onion powder, s&p, and olive oil

Begin by cutting the boneless chops into nice bite size pieces.

Mix the lime juice, cumin, garlic, onion powder, s&p and olive oil together.

In a ziploc - add the pork chunks and then the marinade - put in the fridge and let sit for about an hour or so, remove and let it return to room temp.

Preheat oven to broil - on a tin foil lined pan - place the pork chunks and broil - turning once to cook all over. You want them to get a bit crispy. Serve with rice and beans and a large mixed salad.


Buon Appetito.