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US Stocks Continue Their Ascent Higher


Today's financial recap and tomorrow's financial outlook.

Overnight, Japanese Prime Minister Shinzo Abe said that he would dissolve the country's Parliament on this coming Friday and hold snap elections next month to renew his mandate to help get the economy growing again. If his Liberal Democratic Party did not retain a majority again then he would resign as Prime Minister. Additionally, he announced that he would postpone the next sales tax increase that would take the rate up to 10% until at least 2016, and begin cutting the corporate tax rate at the start of the 2015 fiscal year. The Japanese Nikkei was up 2.18% and retraced three quarters of the prior day's losses.

US markets continued their upward ascent today, the S&P 500 (SPX) made new highs above 2050, which was the high last week. Prices were helped by news from the Bank of England that policy would be easier than had been expected and the possibility of restarting QE is warranted should the economic outlook deteriorate. Similarly, the ECB's Chief Economist said in a press interview that the central bank was preparing for the rapid deployment of further easing measures. This combination of stimulus kept the wind at the stock market's back.

The SPX finished the day up 0.51% after a light selloff in the closing minutes. Health care, material, and industrial stocks led the advance today. Only the telco sector closed negative for the day's trading.

Lower oil prices did not phase equity prices, as has been the trend of late. West-Texas Intermediate crude oil futures fell 1.48% to $74.50 per barrel. Whether or not OPEC cuts production at its meeting next week continues to be a hot topic of discussion amongst market participants.

The producer price index of final demand for October grew more than expected due to higher auto prices from new models and trade services. Prices grew at a 1.5% annual rate from a year ago, above the 1.3% expected. This was due to a 0.2% gain from the prior month compared to a 0.1% drop that was expected. The NAHB index of realtor and homebuilder sentiment for the month of November rose to 58 from 54 last month.

Tomorrow's Financial Outlook

The main event tomorrow that market participants have been waiting for for quite awhile is the minutes of the October FOMC meeting. Participants will be looking for information on why the Fed upgraded its inflation forecast, why it is not concerned with a higher US dollar exchange rate, and what it plans to do with interest rates in the future. At this meeting, the Fed ended its two year asset purchase program and said it could hike rates at a slower or faster rate if the economic outlook warranted. Also scheduled is October housing starts, which are expected to rise modestly to an annualized rate of 1.025 million.

The Bank of Japan will release its policy statement overnightt. It is highly unlikely that the central bank makes any additional moves after doubling its comprehensive easing program at the end of last month, but in this day and age nothing is impossible. Also scheduled for release is the minutes of the Bank of England's policy meeting two weeks ago.

There is a smattering of consumer discretionary companies reporting earnings tomorrow. Those include Target (TGT), Lowe's (LOW), Staples (SPLS), Keurig Green Mountain (GMCR), L Brands (LB), and (CRM).

Twitter: @Minyanville

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No positions in stocks mentioned.

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