Market Perspective for November 24, 2014

Global stocks are off to a strong start on Monday, thanks to China’s decision to cut interest rates. Chinese listed shares in Hong Kong rallied more than 3 percent on Monday and European markets followed with a positive open.

China’s decision to cut rates is good news for the U.S. dollar, which could reach a new multi-year high over the coming weeks. With China now cutting rates and the European Central Bank talking about doing more, many of the world’s major economies are weakening their currencies. In addition to central bank actions, changes including the shale revolution in the United States, continues to support the dollar. Today, the Financial Times is reporting that U.S. oil imports from OPEC are at 30-year lows. This is all strongly positive for U.S. stocks and bonds.

Trading on Monday and Tuesday will set the tone for the week as the U.S. market will be closed on Thanksgiving. Additionally, volume is typically light on Wednesday and again in the half-day trading session on Friday. Even though it is a shortened week, there are some big earnings announcements, led by Hewlett-Packard (HPQ). The company is expected to report an increase in earnings and a decline in sales on Tuesday after the market closes. A few retailers will also report this week, including Tiffany (TIF).

Economic data will be light, but on Tuesday the BEA will announce the second estimate of third quarter GDP growth. Analysts expect the revised number will be 3.3 percent, down from the initial 3.5 percent growth rate announced in October. Several consumer data points will be released, including consumer spending in October and consumer confidence in November. All are expected to be positive in the wake of lower oil prices, with the stronger U.S. dollar also chipping in some support for consumers.

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