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Meidell: The Feds, not the Fed, make the difference

By November 7, 2016 No Comments

Investors and analysts spend a lot of time watching the Fed — more accurately referred to as the Federal Reserve — to get its opinion on the economy and see how this might impact short-term interest rates, also referred to as monetary policy.

However, it was the Feds, as in the FBI, that jolted U.S. stock market futures higher Sunday evening, after the announcement from FBI Director James Comey. U.S. stocks gapped higher at the opening bell on Monday while making additional gains throughout the day. By the end of the trading day, all the major market averages had recovered more than 2 percent, with the Standard and Poor’s 500 up 2.22 percent and the Nasdaq Composite higher by 2.37.

To say that investors are getting jittery before the presidential election is an understatement, Monday’s gains have erased all the losses over the past week and then some.

Still, some might be trying to determine the outcome of the election based on Monday’s market gains, but we only have to look back to June of this year, prior to the U.K.’s “Brexit” vote, to find a time when that strategy failed. In the case of Brexit, market trends, polls, and even odds-makers were all indicating that the “Remain” vote would win. That clearly is not how things turned out.

In cases like we find ourselves in today, it typically pays to react to the real news instead of trying to anticipate it. Once we know the results of the election, calmer heads usually prevail, even if it’s not our preferred candidate.

Generally speaking, commodities have performed better this week, with the top of the list dominated by industrial metals. This week’s top performing commodities are led by the S&P GSCI Coffee index, up 6.64 percent over the past five trading days, followed by the S&P GSCI Palladium index, rising 6.27 percent.