The Daily Dose: Useful Rumors to Discuss

 | Dec 30, 2013 | 11:30 AM EST
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:::Mega Spoiler Alert:::

I am tentatively scheduled for CNBC's "Fast Monday" today sometime after 5:00 p.m. EST. News often changes, so don't be alarmed if you do not see my smiling face on air. Simply send me an email for any notes I may have developed. Hugs, and happy holidays!

If you do see me on, send tweets my way @BrianSozzi @CNBCFastMoney. I will be releasing a couple actionable tidbits real time on Twitter on the topic we intend to discuss.

On to Business

Markets are ripping higher! "Valuation doesn't matter" calls are popping up like baby cornstalks in a dusty field. But you need to know this: December 30, 2013 will represent eight trading sessions since the FOMC's last disclosure on its policy intensions, this time signaling a curtailment in QE. When QE2 ended on June 30, 2011, the S&P 500 peaked on July 7, 2011.

An argument could be made that unlike the QE2 program, the Federal Reserve has not abruptly ended its monthly easing efforts, just signaled a gradual winding down while promising low rates for an extended period. The market, however, is forward-looking, and it could begin doing what it did in 2011 -- pricing in higher risk factors for companies by the second quarter of 2014. This could happen amid more hawkish Fed language, another upcoming debt ceiling debate and a 10-year north of the 3% that investors have found some comfort in as of late.

A Couple Things to Watch

  1. Any sell-side downgrades on excessively valued companies and the associated market reaction. Use Twitter (TWTR) as your guide: a downgrade wiped 13% from the company's stock in a session, signaling the market may be willing to finally listen to "valuations do matter" calls on names bought on cheap margin and hope.
  2. Stock reactions to positive corporate pre-announcements, which will be arriving in early to mid-January. Negative reactions, also known as "sell the news", would be indicative of accelerated U.S. growth being priced into corporate valuations.
  3. Inventory-level-related comments from retailers in their holiday sales reports, usually in the first week of January. I happen to think many retailers overbought inventory for the holidays and that painful lesson that ensued will cause cautious order planning for the first quarter of 2014. That has an impact, at least initially, on logistics companies to household brands selling non-essentials on sales floors.

While We Are Talking Date

On March 19, the market will get to listen to Janet Yellen doing battle with the media for the first time following a FOMC policy decision. Yellen will be equipped with a summary of economic projections. She may well issue snippets of her monetary policy views beforehand to establish market expectations further from the recent FOMC gathering. Either way, her initial communications are likely to contain missteps just as Bernanke's did initially. One reason for that is that markets will still be at lofty valuations encompassing a smooth transition atop the Fed. Risk to this surprise: Yellen is the Fed's head of communications and really was the behind-the-scenes force in training Bernanke to speak about Fed policy properly in public.

One Shocking Photo to Socially Share

I will not rest until @Walmart acknowledges my findings on Twitter of very worrying levels of inventory throughout the holiday season. And sorry Wal-Mart (WMT), acknowledging me doesn't mean having your head of investor relations view my LinkedIn profile -- which has happened in recent months. Damnit, investors need to be told the truth by the companies of which they are part owners.  I swear I will next to kill myself to bring that truth to life on any company.

Pictured here is a secret room of excess Wal-Mart goods -- not packed as efficiently as the world's "most efficient retailer" would suggest during its analyst events.

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