A Baker's January

As goes January, so goes the year (so goes the adage).  And so far, despite some rocking and rolling, January looks to have held its own as it trudges through its final trading session.

Even if you net out the roughly 1.5% pop the market enjoyed on the first trading day of the year, the major market indices are still all higher (pictured are the daily price charts for January for the S&P 500, the Dow, and the NASDAQ Composite).

Granted, today is off to a rocky fugly start, but all day (and all night) long we've got market buoying economic and political events to look forward to.  More than anything else, the next 12 hours are going to see a lot of uncertainty taken out of financial markets and the American economy, likely supplanted by renewed optimism for growth.  Even if one or two of today's focal points falter, there's a lot about to unfold that should give January (especially if we help ourselves to one day of February (a baker's January if you will)) the shot in the arm it needs to put up a very convincing number.

Some highlights to watch for:

• 10:00 am: Consumer confidence numbers released
  Update: The index rose to 106.3, the highest level since June 2002 and above economists' expectations.  Off to a good start.


• 2:15 am: Federal Reserve FOMC statement due out
  Alan's last hurrah is basically a lock to raise the fed funds rate a 14th consecutive time to 4.5%, but this is the meeting many economists have been waiting for to get clarity on whether the Fed will quit after one more.  If the language changes to confirm the end is nigh (key words: accommodative and measured), expect a healthy boost in market sentiment.
  Update: The FOMC went to 4.5% as expected, and rolled out some new language, which seems to me to clearly telegraph an intended pause on the near horizon, as they do not refer to policy as "accommodative", and note that it "may" (versus "is likely to") need additional firming depending on inflation pressures, which is markedly dovish for Greenspan's Fed.


• 2:30 pm: Judge Alito will be confirmed to the Supreme Court
  Another event that removes uncertainty and allows the Senate to return quickly to other pressing business like tax reform and renewing the Patriot Act.
  Update: Well, it came a few hours early, but it came just the same.  58-42.


• 4:00 pm: Google's fourth quarter earnings will be released after the closing bell
  Expectations for Google have gotten pretty stratospheric, so this is a bit of a wild card, but they've shown a knack for surprising to the upside, no matter how lofty the estimates. If Google delivers, tech stocks should enjoy a swell tide.


• 9:00 pm: State of the Union Address
  A Wall Street Journal poll recently showed only 22% of the country believes the economy has gotten better over the last year.  When sentiment is so low, compared to the actual economic picture, it's got nowhere to go but up when new data illustrate the more favorable reality and when the spotlight is shining on the strengths and successes supporting a more optimistic outlook.  The SOTU will be a fine opportunity for the President to remind us of these strengths and to lay out and reaffirm a conservative economic agenda, filled with market-pleasing morsels like tasty tax cuts, strong security policies, and entitlement and tort reform.

Whenever confidence in the economy rises (and uncertainty dwindles) we can expect to see the markets improve.  And with so many blithe bits of news befalling us all at once, I expect we're in for a hearty 2-day rally to close out the month of January+1.