Good Wednesday AM on this best day of the week,

Stocks fat as are bonds awaiting the FOMC release at 11am.  For all involved, the biggest thing will be any comments on progress of the asset/bond purchase program, currently at $120 billion a month. If the Fed were to curtail those purchases or change them to more short term biased, rates will likely push up. Any increase in amount or duration should help rates. The data today was not good (but having no impact on the markets). Retail sales, which account for 70% of GDP, were DOWN 1.1%. This included Black Friday and Cyber Monday. Holiday spending is off this year. In truth, this is one f the few metrics that makes sense to me.

Back to the Fed, given lack of inflation, increasing jobless claims, and now retail sales all showing signs of weakness, the FED could share its concerns and come off as more dovish today. This could spark a rally in bonds. It could hurt stocks but that would be temporary until the stimulus is passed. On that, the top congressional leaders from both parties met for several hours yesterday and afterwards reported that they are making progress, while not there on an accord yet. Later today lawmakers are expected to unveil a $1.4 trillion omnibus spending bill which must be passed by Friday to avert a government shutdown. It’s a wait and see until 11 (and then the press conference at 11:30).

Where is the inventory?  The chart below tells the story. Homes under contract decreasing while months of inventory also decreasing. These should be working in opposite if the market was balanced. I hear people worrying about price deflation. I guess it could happen, but I don’t see it on the horizon between the chart below and that for every 3 people that leave Las Vegas, 4 are moving in.

Please remain safe and healthy, make today great!