Let's see how many people still get it wrong. European stocks are going down for a good reason --not that Fed chief Yellen should have raised interest rates, but that she didn't.
Yellen's non-move may have put a longer-term floor on the dollar and the euro put in a monster day vs. the greenback, with the CurrencyShares Euro ETF (FXE) moving from $110.8 the moment before the statement to $112.19 at the bell. That's the kind of monumental move that will cause tremors in most of the big European manufacturers that have feasted off our companies' weaker sales.
So, if the European stock markets were to have gone up today, it would have been a sign of irrationality, as anyone who follows the largest European exporters knows that the thing they most fear is that the dollar really is done going higher. I am sure, though, we will hear a lot of commentary from those who just endlessly press the need for a hike that Europe's bourses are down because "Yellen did the wrong thing."
That is the real nitty gritty of what happened yesterday. I think it is as simple as saying "raising numbers Procter (PG), cutting numbers Unilever (UL)." The competitive advantage of the foreigners in the sector is diminishing now -- believe me, Phillips (PHG) feels it over Dividend Stock Advisor portfolio holding General Electric (GE), too. If the U.S. automakers hadn't made such huge bets in China and Latin America, those would be the stocks I would say you should buy off Yellen's move.
What tends to happen, sadly, is that most people will not anticipate this change in currencies that seems to be occurring until after the companies tell them that it's changed. I think that the last reporting period saw most American companies basing their currency views on what amounts to FXE $110. I would also say that most believed that the next stop would be FXE $100.
Once the companies tell us that they are doing better from a weaker dollar, then the big move will occur. However, just like those who got into the stock market during the period of maximum Fed-head induced uncertainty, those who anticipate this move now, particularly in the currency-sensitive food and drug stocks, will make the most money.
And just like those intrepid traders who rang the register yesterday into the good news of no rate hike, when companies like PepsiCo (PEP) and Procter & Gamble get around to saying "wow, we can raise numbers now on the stronger euro," the same smarter money will be selling, not buying.
I know, seems silly. But in the end, as I always tell you, this is a business about earnings estimates and whether a company can beat them and raise forecasts or not. Those companies that can beat and raise will most likely see stocks go higher. Those that meet will see their stocks go nowhere. And those that cut?
They are slated to go down no matter what. Which is why if you do favor higher stock prices, then you are thankful for what Yellen's Fed did -- unless, of course, you favor higher European stock prices, because in that case, she did you no favors when she did nothing yesterday.