The market is trading slightly lower ahead of today’s policy announcement from the Federal Reserve, which Wall Street gets at 2:15pm (EST). The reaction to the election by the bulls seems uninspired, which tells us that a lot will be riding on the outcome of the FOMC meeting.
The Fed is all but certain to detail its plan for buying more government bonds and Wall Street will be looking for a number of at least $500 billion to start. The move will further lower interest rates on mortgages and other loans.
In economic news, the ADP Employment Change report came in better-than-expected as the private-sector employment grew by 43,000 in October. U.S. factory orders rose by a higher-than-expected 2.1% in September while the ISM non-manufacturing index for October came in at 54.3 and higher than the 53.4 number that had been penciled in.
The Dow is down 26 points to 11,162 while the S&P 500 is lower by 4 points to 1,189. The Nasdaq is off by 11 points and is at 2,522.
One stock we want to talk about before we go is Garmin (GRMN, $30.24, down $2.77) which is down 8% after reporting earnings. The maker of GPS devices reported a profit of $280 million, or $1.43 per share but after a tax adjustment and other one-time items, Garmin earned $0.70 a share. Revenue fell to $692 million from $781 million a year ago. Wall Street was looking for Garmin to earn $0.75 a share.
We have recommended put options on Garmin a few times this year with mixed results but our thesis is still in play. The company is in trouble. We have gone on record and said this stock will be in the teens sometime in the near future as Garmin continues to bleed money.
The company’s automobile and mobile division, the business whose personal navigators made the company famous, is declining faster than President Obama’s approval numbers. We mentioned how the trend to smartphones with built-in maps and GPS radios would crush the company’s business and the momentum is picking up. People no longer seem to want their personal navigators on their dashboards as revenue for these kinds of products dropped 20% during the quarter.
We will be looking to short Garmin again and probably will if and when it starts to get near its 52-week low of $26.11.
We have about 45 minutes before the Fed announces and we could get a move higher today. If not, we are expecting the rally to continue for the rest of November and into December, regardless of today’s results.