Traders went into yesterday positive on the global economy. Then
the Federal Reserve kept easy money in place, and the bulls ran
The graphic below shows data from our researchLAB market scanner
before and after the big announcement. Gains were initially
limited, but then money poured into stocks that benefit from a weak
dollar and low interest rates: gold and silver miners,
homebuilders, and emerging markets.
Fed officials will continue to buy $85 billion of bonds a month
because higher interest rates "could slow the pace of improvement
in the economy and labor market," according to the central bank's
statement. Bond yields had climbed sharply in recent months on
concern that the Fed would "taper" purchases, and most economists
expected a reduction to about $70 billion going into yesterday's
But more is going on than simple money printing. Economic reports
from around the world have beaten forecasts since the summer,
suggesting that both Chinese and European growth were accelerating
on their own.
has flagged this trend on several occasions, detecting the flow of
capital into ocean-shipping companies, Chinese stocks, and
steelmakers in over the last month. optionMONSTER also pointed to
price action in the
euro and Australian dollar
as a bullish indicator earlier this month.
(Graphic courtesy of
Two metal stocks in particular stood out early yesterday, long
before the Fed gave a green light to target the sector.
Cliffs Natural Resources
saw early buyers in its November 28 calls for $0.60, followed
minutes later by the November 25 calls in U.S. Steel for $0.26. The
CLF contracts ended the session up to $0.70 and the X calls fetched
Later in the day, there was also heavy bullish activity in
including Vale, BHP Billiton, and
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