There was a big drumroll and then mostly silence as the Federal Reserve released the minutes from its latest Federal Open Market Committee (FOMC) gathering.

For me, the minutes continue to underscore the disconnection at the Fed where at least three members felt the need to hike rates; even as more and more signs point to the economy slowing down rather than speeding up.

Still, the minutes took some of the edge off the urgency factor, resulting in consensus for a December hike, slumping to 65.6% from 70.6% coming into the session. 

However, the action in the bond market suggests maybe the Fed has lost control over rates as the 10-year bond yield broke through key resistance points.

There are several factors when it comes to the bond market, including an avalanche of supply.

Then there’s the JOLTs report, which laid an egg but adds credence to sub-par jobs data for the last couple of months.  Job openings in August decreased month-over- month by 388,000 or (7.3%). While workers are calling it quits this held steady at 3.0 million.

This report is said to be very important to Janet Yellen. It bolsters her reluctance to take action.  I think there is too much fretting over 25-basis points when the clear threat to the stock market rally is a sustained series of rate hikes even when the data doesn’t support such action.

American Exceptionalism

Yesterday, the seesaw session finished with the Dow and S&P higher; NASDAQ slipped in the red as a continued rally in Apple (AAPL) wasn’t enough to offset weakness in biotechnology. By now, everyone knows the Samsung (SSNLF) Smartphone drama came to its final act with the South Korean electronics giant tossing in the towel on the Note 7.  Things are so bad that customers may not be able to get their recalled phones back to the manufacturer as FedEx announced on Wednesday that it won’t ship them.

But this stock is about American Exceptionalism, which we don’t hear about anymore but it is still a very real thing. 

Apple sells a lot more phones outside America than domestically. Its fastest growing market is China where there are a number of much cheaper alternatives. However, it’s not just American smart phones that the world craves and pays a premium for.

Whirlpool (WHR) sells its wares outside the United States, and that number will swell as they roll out ‘Internet of Things’ appliances.

Caterpillar (CAT) does more business outside the United States than inside, but the majority of its global workforce is in this country. The stock is the best performer in the Dow this year.

Harley-Davidson (HOG) Motorcycle sales are surging in places such as China because people around the world see it as a proxy for American coolness and that know-how attitude. The bottom line is that American Exceptionalism exists, and we must take advantage of that with smart trade deals and policies.

It’s not about exploding phones, it’s about trailblazing phones, washing machines, earth-moving equipment, and software…and the list goes on… 

Today’s Session

China trade data is spooking the market this morning as there are more signs of flat global trade, which means flat demand from flaccid economies.  The fact that Chinese exports are a proxy for the US and European economies is intriguing in the face of growing pressure for protectionism and this is something to consider if we go in that direction.

China’s overall trade surplus increased $41.999 billion, well below the $53.0 billion anticipated.

Initial jobless claims continue to move lower, but I don’t think it matters as much as the trade data and the persistent rise of the US dollar.