IMPACT OF DISCOUNT RATE HIKE?

By now unless you've been in a hole you all know the fed raised the discount rate last night. Now the discount rate used to be far more important years ago but the focus will be on the symbolism. Given the bullish psychology in the markets my guess is the rate hike will be viewed as being done because credit markets no longer need emergency support, and not the beginning of a long series of rate hikes to slow the economy. Futures were down overnight but they have cut their losses in half so the open this morning does not look too bad.

Meanwhile the MLP index seems to be heading for a challenge of the recent high around 300. The MACD is in buy mode and frankly the trades for months have been pretty easy to see. I continue to regard 300 as criticial to this uptrend. If we dont break through then we could be entering a trading range which will be bordered by 270 to 300. And that wont be too bad.

Some leftover news from last night from Energy Transfer Partners (ETP) which posted earnings. Also putting up earnings is Energy Transfer (ETE). Im not sure if this is a reaction to earnings but Morgan Keegan is downgrading Energy Transfer Equity (ETE) to market perform from outperform. Market reaction lately is for mlps to sell off on earnings no matter how good they are( for the most part this has been true). There are no headlines on the corporate side to speak of this morning.

CPI is the driver this morning on the data front. Bond yields are back up to 3.80 on the 10 year. Btw i have been long the TBT (double short 10 year) so as yields rise the TBT rises and i've been selling calls against it which makes for nice returns. Back to the CPI its a market friendly number this morning so we're seeing an immediate reaction of stocks cutting losses and yields falling off the highs of the day. The dollar is up but off its high of the day. Energy is a little lower and we have nat gas numbers coming out later this morning.