It’s Fed Day, and the street is waiting with baited breath over clearer instructions on how the folks that found so many creative ways to print money will lower their balance sheet.  There are going to be repercussions no matter how tactical, but the key is an acknowledgement of the street’s concerns.

Moreover, the Fed should use today’s statement to articulate improvements in the economy even if they take the credit.  On that note, disinflationary forces continue to linger, which leads me to wonder what is the true meaning of “transitory.” 

The $4.47 billion is mostly U.S. Treasury securities of $2,465 billion and Mortgage-backed securities of $1,769 billion.  The street would like to see the Fed focus on paring its balance sheet ahead of hiking rates, but the fact is the underlying economy can handle smart Fed moves.

The market will also be influenced by the existing home sales report and the EIA update in petroleum inventories.

Earnings reactions continue to be brutal for winners and catastrophic for those companies that miss and/or guide lower.

• Adobe (ADBE)
• General Mills (GIS)
• Bed Bath & Beyond (BBBY)
• FedEx (FDX)

Interestingly, considering the carnage at Bed Bath and Beyond (BBBY), Fred Smith, CEO of FedEx, says e-commerce is not going to eliminate the retailing sector of the country.  He thinks it continues to grow, but it will fall short of ever being even 50% of total from its current 10% share.

Part of his rationale is e-commerce companies are rapidly seeking brick and mortar outlets themselves.

There is no doubt there will be brick and mortar winners, but the shopping experience must improve greatly. 

Let’s keep our powder dry this morning