Lower crop prices mean lower sales for Deere & Co.

Stocks drifted lower yesterday as traders yawned through the Fed meeting minutes which served up a big nothingburger. The real estate market IS feeling the pinch… despite what the insiders want you to believe.

Wait, can you repeat that, please? Have you ever been speaking with someone you have a great deal of respect for and not had a clue about what they were talking about? Your mind races as the person across from you confidently drones on about this and that. On the surface they appear to be telling you something really, really important and well thought out. The problem is that you are just not following their postulation. Now, you know that the person is smart – but still… nothing. You panic and wonder if it is you that is just dimwitted. So, you try and buy yourself some time to process the info, and you say, “excuse me, I missed that last point.” The other person simply smiles, and then restarts the stream of… ugh, still nothing. The person finally says something like “you know what I mean,” and you shake your head with a non-committed nod. You hope that this “smart” person moves on to something more mundane like the weather or what they ate for dinner the prior night.

Now, I am going to say something controversial… ish. Do you find that there is a preponderance of that “smart talk” in the financial markets? Come on, admit it, you put that financial news station on your TV, and within 5 minutes you have learned that 2 people think that the market is going higher and 2 people think the market is going lower. Still not a statistically sound sample (1 categorical variable, 4 respondents ). But even if you were ok with just k=1 and n=4, you have still learned nothing about your burning question on where the market is going. You hold out and hope that the person after the commercial break will break the tie. You need the answer now, because your dog is waiting by the door with a look of urgency . Back to the interview and the 5^th, so-called expert says… well… nothing. You are not even sure what the person is even saying. You flick off the TV in disappointment, questioning your own market acumen. Don’t worry, it’s not you. American President Harry Truman made a timeless joke and asked to be sent a “one-armed economist,” after bristling that economists are constantly giving him “on the one hand this and on the other hand that” information. Speaking of economists…

The US Federal Reserve has its share of really smart economists. I would argue that those are the most powerful economists in the world, and I am sure you would agree. That said, wouldn’t you love to be a fly on the wall as those powerful folks deliberate on the state of the US economy and what to do with interest rate policy? Well, the closest you can come is by reading the FOMC Meeting Minutes. They came out yesterday. What, you missed it? No problem, I have read them for you. Not once, but several times. You see, I was searching for some information, and you will never guess what I came up with. If you guessed nothing, then you are correct. The bankers have decided that if inflation gets worse that raising rates further would be appropriate, but if things continue as they are that doing nothing… may be appropriate. Nothing. They do recognize that rates are restrictive, but they want to be sure that the recent dip in inflation is not just a “head fake.” A head fake is Wall Street terminology for a false signal, a “just kidding” kind of thing. All jesting aside, the Fed did not really say anything new on the policy front, so it is appropriate to think about what it did not say, and there was no mention of rate cuts. Not surprising, but information, nonetheless. Additionally, after reading through it a few times and comparing it to prior missives, one can detect a slightly dovish patina developing on the edges of the committee. Clearly that is not information you want to go and trade on. It is important to note however, that the market has already been anticipating this, which is clear from the price action in stocks and bonds over the past few weeks. The lack of anything scary in yesterday's release only confirmed it. The Treasury market yesterday barely even responded to the release. Fed Funds futures markets continue to assign a low probability of another +25 basis-point hike (4.8%) through March at which point futures are predicting a 29% chance of a rate cut. That IS some real information, now go and walk your dog… she has been waiting patiently.

WHAT’S GOING down or UP IN THE PREMARKET

NVIDIA Corp (NVDA) shares are higher by +1.01% in the premarket after beating EPS and Revenue estimates by +19.47% and +12.59% respectively. Despite providing current quarter guidance that was well above analyst expectations, the stock initially declined as whisper expectations were far greater than those published. Rightly so, as the stock has risen by some +241% year to date. Still, who can argue with year over year growth in revenues from $5.93 billion to $18.12 billion? The stock has erased its initial declines. Dividend yield: 0.03%. Potential average analyst target upside: +32.0%.

Deere & Co. (DE) shares are lower by -5.99% in the premarket after the company announced a strong EPS and Revenue beat for last quarter. Full year guidance, however, was well below analyst expectations. The company cited weakening sales due to falling crop prices. Of the analysts who cover Deere, 55.2% rate it a BUY versus 6.9% who rate it a SELL, and the remaining 37.9% rate it a HOLD. Dividend yield: 1.41%. Potential average analyst target upside: +13.9%.

YESTERDAY’S MARKETS

NEXT UP

• Initial Jobless Claims (Nov 18) is expected to come in at 228k versus last week’s 231k claims.
• Durable Goods Orders (October) may have slipped by -3.2% after climbing by +4.6% in the prior month.
• University of Michigan Sentiment (Nov) is expected to be revised up to 61.0 from its earlier estimate of 60.4.
• Markets are closed tomorrow for Thanksgiving in the US.
• Next week’s numbers: still more housing numbers, Consumer Confidence, regional Fed reports, Fed Beige Book, GDP, Personal Income, Personal Spending, and the PCE Deflator. Check back in on Monday for calendars and details.