Wednesday, May 21, 2014

Good Morning Washington State - My Garden is growing; no bug problems yet (except deer - bigggg bugs), no fungus...  Broccoli, Cauliflower, Kale, all being harvested now.  Cabbage will be sold at the farmer's market this week.  Planted heirloom tomatoes this week outside.  Planted tomatoes in the greenhouse 3 weeks ago.  Baby Canadian Geese look like little moving dandelions in my lawn as the sun rises.  They are soooooo cute and funny.  Iris are beginning to bloom, and the early peonies will bloom this week.  Lilacs are blooming (and smell wonderful right now).  Isn't Spokane, Wa the lilac capital of the US?  I'll have to look that up.  DEER love my lilacs, but when the lilacs get large enough the deer just keep them trimmed at the bottom.

On to less interesting but vital subjects.

Summary:

US Stock Markets took a trip to the woodshed yesterday.  Small Caps led the way.  Some blamed the move on Philadelphia Fed President Plosser's view the economy is improving and rates may rise.  Actually, most of Tuesday's losses were before he spoke, and there was no selling interest in the Treasury Curve before or after his speech. 

The market appears to going to open up strongly.  Explaining why that is and whether the "WHY" will push the market higher after the opening is challenging at best.  To underscore:

1.   Foreign equity markets are mixed

2.   Bank of Japan left its monetary policy unchanged (as expected).  There is no sense that BOJ will clarify any financial policy.  I can't help noting that YEN is up this morning, and it is beyond me to understand why.   Sadly (sad because I love going to Japan and working with the Japanese has been a positive experience for me), their outlook smells like 3 day old garbage. 

3.   Bank of England thinks (stress thinks) there will be an interest rate hike.  All this talk is jawboning by BOE's Mark Carney.  He did this in Canada, and now he is doing it in England.  However, as many of us know, perception is all that counts, and the perception seems to be they will raise rates.  (Track me, but I doubt BOE is going to raise rates, but I could be wrong.)

Conclusion: 

Should see a strong opening, but there is no fundamentals to suggest why that should be.  That could lead to chop until FOMC minutes are released, and Dr. Janet Yellen speaks at 11:30 AM PDT today.