Today the lights are almost certain to go dark on the market’s favorite letter/number combination: QE3.
The Federal Reserve’s rate-setting committee, the Federal Open Market Committee, concludes its two-day meeting this afternoon, with a policy statement but without a press conference. The biggest takeaway is the widely expected announcement that the Fed’s third round of quantitative easing will conclude this month as scheduled. The market will also be engaging in its usual tea-leaf reading exercise with the statement, looking to see if two key phrases are still there: “considerable time” and “significant underutilization.”
The first refers to the amount of time after the end of QE3 before the Fed expects to raise interest rates. The second refers to the perceived slack in the labor market. Alterations to either phrase have the potential to move the market.
Since cranking to life in 2012, QE3 has resulted in more than $1.5 trillion worth of bond purchases from the central bank, taking its balance sheet from under $3 trillion to about $4.5 trillion. Before the crisis started, the Fed’s balance sheet was under $1 trillion. How it unwinds that bloated asset base – and how that effects the markets and the economy – is a big question, but one that nobody’s very concerned about right now.
The market seems pretty copacetic with the whole thing, in fact. For one thing, there’s already been some jawboning about extending or renewing bond-buying. For another, the bank has made it pretty clear it views QE as something it can crank up when it feels the need. In other words, the message to the market continues to be that the proverbial Fed Put is still in place.
Here’s what the market is thinking ahead of today’s meeting.
Peter Boockvar, chief market analyst, Lindsey Group: Outside of the official end of QE today, we're back to parsing the wording of the FOMC statement. "Considerable time" has been rendered worthless in telling us anything of significance as Yellen in her last press conference backed away from it and said to focus on the data. Also, three weeks ago Stanley Fischer said "considerable time" can be anywhere from two months to two years. "Significant underutilization" is the key to watch and whether it stays in.
Notwithstanding 14-year lows in jobless claims, 13-year highs in job openings, and a 5 handle on the unemployment rate, Yellen & Co. will likely leave these two words in because they still believe in the excess supply of labor that is just waiting to jump back in to the labor market. This belief has proven to be false as seen in the participation rate which is not reversing. Short term interest rates belong higher but we know the Fed is afraid of reversing the monster they created.
Joan McCullough, Longford Associates: Just because they formally end QE 3, doesn't mean that they can't institute QE 4. If they see fit. Should that, er, necessity arise, they can always save face by drumming up another name or acronym…He who has the magic wand, has all the power.
Ed Yardeni, president, Yardeni Research: The FOMC statement this afternoon isn't likely to pull any tricks. Given the strength in stock prices so far this week, investors might be expecting some treats. It's likely that Fed officials were spooked by the violent selloff in stocks earlier this month. So at their pre-Halloween two-day meeting that ends today, they might decide not to surprise the markets one way or the other now that stocks have rebounded. In other words, there might not be any significant changes in the language that appeared in the previous FOMC statement on Sept. 17. If so, then no news should be good news. Of course, the FOMC will state the obvious: QE has been terminated.
Kit Juckes, forex strategist, Societe Generale: Along with the majority of observers, we expect a final $15 [billion] cut in the Fed’s monthly bond purchases, and no meaningful change in the language from the FOMC statement. There will be no new dots, no new projections and no press conference. It should be a non-event, and you wouldn’t rule out another rise in equity indices around the world given the recent momentum.
Chris Low, chief economist, FTN Financial: Bond buying has likely moved from the extraordinary to the ordinary part of the Fed's tool kit, ready to be rebooted the next time the Fed thinks the economy needs a boost from the zero bound.
Guy LeBas, chief fixed income strategist, Janney Montgomery: We expect the Fed will allow QE3 to end as planned, particularly since the effects of this termination are largely priced into the markets. The FOMC statement will likely emphasize in stronger language, however, that the Fed is continuing to reinvest principal proceeds from their current portfolio. The barrier for QE4 will likely be very high, though a further deterioration in inflation expectations and current period inflation could do the trick.
The end of QE and reduced prospects for more of the same mean that the timing and pace of rate hikes will be the primary policy tool for the Fed.
sixflags.com Plenty of stocks go up and down in any given week. The gainers inspire us to keep investing. The decliners keep greed in check while reminding us about the risks of the equity markets. Let's go over some of last week's best and worst performers. Regulus Therapeutics (RGLS) -- Up 161 percent last week Last week's biggest winner was a biotech upstart that got welcome news on a potential hepatitis C treatment. Regulus Therapeutics is showing that patients receiving a single injection of its drug are reporting lower viral loads a month later. There are still plenty of regulatory hurdles to clear, but it's certainly encouraging. Select Comfort (SCSS) -- Up 21 percent last week Shares of Select Comfort moved higher after it announced blowout quarterly results. The company behind the Sleep Number air-chambered mattresses saw net sales and earnings per share climb 23 percent and 22 percent, respectively. Select Comfort's strong performance was fueled by an impressive 16 percent spike in comparable-store sales. The favorable momentum is going to linger: Select Comfort is boosting its guidance for the entire year. Six Flags (SIX) -- Up 16 percent last week It was a summer of thrills at Six Flags. Shares of the regional amusement park operator rose like a coaster on a chain lift after it announced better-than-expected revenue growth. Revenue increased 7 percent on a combination of a slight uptick in attendance, higher admission prices, and guests spending more once inside the park. The report was encouraging enough for Six Flags to boost its dividend. The stock is now yielding a hearty 5.3 percent. Boulder Brands (BDBD) -- Down 31 percent last week Shares of Boulder Brands lost nearly a third of their value after the food company behind Smart Balance buttery spreads and EVOL frozen entrees warned of a soft holiday quarter. It now foresees net sales of $132 million to $137 million for the fourth quarter. We would be looking at a sequential dip from the third quarter's $133.9 million if it ultimately clocks in at the low end of its range. Boulder Brands also sees an adjusted profit of 4 cents a share to 6 cents a share for the quarter. It had previously expected to earn at least 18 cents a share. Boulder Brands was riding high as a play on the gluten-free trend. Its brands include Udi's and Glutino, two providers of gluten-free foods. The bleaker outlook is leading some on Wall Street to wonder if the gluten-free fad has started to wane. Angie's List (ANGI) -- Down 22 percent last week Angie's List has had a wild October. The stock soared earlier this month after London's Financial Times reported that the online service referral specialist was in talks with investment bankers to put itself up for sale. Now it's going the other way after posting a wider quarterly loss than Wall Street was modeling. Wunderlich Securities and Needham downgraded Angie's List following the report. Subscriber growth is slowing as Angie's List competes with a growing number of outlets for free reviews of local service providers. Lumber Liquidators (LL) -- Down 17 percent last week We're not doing up our floors in stylish hardwood planks the way we used to, and Lumber Liquidators is feeling the pain. The chain of 350 stores that specialize in discounted wood flooring tumbled after posting a profit that fell short of analyst targets. This is the third quarter in a row that Lumber Liquidators has fallen short on the bottom line. More from Rick Aristotle Munarriz
Stephane Jourdain/AFP/Getty Images If you stop by a McDonald's (MCD) and find some franchise owner looking wistfully at you, and then gazing over at a poster for the company's annual Monopoly promotion or the return of the McRib, don't be surprised. Things are tough for franchisees standing under the golden arches, and they're really hoping for something -- anything -- that can reverse the trend of dropping sales. For a fast food company that for a long time could do no wrong , McDonald's is in a not-so-happy place now. In September, the chain announced its worst sales dip since 2003, according to Bloomberg. Between slow demand in the U.S. and health scares over a Chinese meat supplier, same-store sales were down in August 3.2 percent in the U.S. and 7.3 percent in Asia, for an overall 3.7 percent hit. And it's expected that the chain will see another 2.7 percent drop in September, according to the site BurgerBusiness.com. Same-store sales, or sales in locations that have been open more than a year, are a critical measurement in retail. They show how well a company's operations are doing without the distorting factor of new outlets opening. So same-store sales declines are a problem not just for McDonald's, but its franchise owners.
Royals catcher Salvador Perez celebrates with fans after the team won the pennant. Kansas City fans will pay more than $1,000 on average to watch the team in the World Series. NEW YORK (CNNMoney) Kansas City Royals fans, eager to watch their team play in the World Series for the first time in 29 years, are paying top dollar for the first two games of the Series. 
netflix.com Netflix (NFLX) is still growing, but it's not growing fast enough. The world's leading premium video service took a hit after posting disappointing quarterly results on Wednesday night. The stock-rattling shocker is that Netflix ended the third quarter with 53.06 million streaming subscribers worldwide. That's 3 million more than it had at the end of June, but Netflix itself was forecasting 53.74 million accounts. Netflix is typically conservative with its guidance, making the shortfall as troubling as it is surprising. It has a scapegoat. It's pointing to its springtime rate increase as the primary cause for its blown forecast. "Slightly higher prices result in slightly less growth, other things being equal, and this is manifested more clearly in higher adoption markets such as the U.S.," Netflix notes in its letter to shareholders. When it issued its forecast in late July it was still basking in the magnetism of the second season of "Orange Is the New Black" that resulted in a healthy trickle of signups. Once that buzz subsided, new members became harder to come by. Bucking the Trend Netflix's move to increase the monthly rate in May didn't take the market by surprise. A few months earlier it had announced in an earnings call that it was entertaining a hike. It was pondering $8.99 or $9.99 as the new monthly rate, up from the original $7.99. It chose the lower of the two increases. Existing subscribers were fine with the move. Netflix promised to grandfather them in at $7.99 a month for two years. The market understood, and that was something that couldn't be said a few years ago when there was widespread outrage about Netflix splitting its DVD and streaming services. Customers on DVD-based plans would have to pay as much as 60 percent more if they wanted to continue to stream content, too. May's increase was the first time that Netflix had increased the rate of its stand-alone DVD service. It seemed as if it would be able to pull it off without a hitch, but now, potential new customers appear to be balking. HBO on the Go With Redbox Instant shutting down and Streampix redefining its value proposition, the competition seemed to be caving in to Netflix. However, just hours before Netflix's report, Time Warner's (TWX) HBO suggested that it will roll out a stand-alone streaming service in this country. HBO didn't offer pricing or a timetable for its availability, but it's an interesting move for a company that Netflix CEO Reed Hasting has often considered its biggest rival. This may make it seem like an unfortunate time for Netflix to be increasing prices, but since HBO charges roughly twice as much as Netflix for its cable-based offering, it's unlikely to be much of an issue here. Netflix is looking to land more than 4 million net new streaming additions during the current quarter. It's targeting to surpass 57 million streaming members by year's end, and that forecast is taking into consideration the slowdown since the price hike. Netflix will be fine, even if the stock action paints a bleaker portrait. More from Rick Aristotle Munarriz
Abbas Dulleh/APHealth workers in Liberia wait to carry the body of a suspected Ebola victim. The Ebola virus outbreak in West Africa has been brutal. There have been 8,400 cases, according to the Centers for Disease Control and Prevention, and 4,033 confirmed deaths, and the outlook is only getting more grim, according to the World Health Organization. But the scary statistics could mean a windfall for some foresightful investors who figured that someday, we'd all be worried about this deadly plague. Nevada-based Blue String Ventures bought the domain name ebola.com in 2008 and hopes to sell it now for $150,000, according to CNBC. "We've had many inquiries on the domain over the years," Jon Schultz, president of Blue String Ventures, said. Blue String Ventures buys domain names that it thinks will eventually grow in value when companies or organizations suddenly want to be associated with an idea or topic. The firm owns domain names like Fukushima.com, referring to the nuclear plant meltdown in Japan, as well as health- or dietary supplement-related ones, including GreenCoffeeExtract.com and BirdFlu.com For now, the page ebola.com includes various links. One is to an ebook claiming that nutritional supplements might help cure the disease; another is to a site that sells that supplement. Commercial Interest Said to Be Unlikely "Having seen the movie 'Outbreak,' I was entranced by the subject and couldn't resist buying the domain," Schultz told CNBC. Large pharmaceutical firms and smaller biotech startups working on treatments or cures for Ebola have reportedly been approached about buying the site, but so far there have apparently been no takers. That isn't surprising. Pharmaceutical companies generally focus on diseases with a much larger rate of incidence or where the patients have health insurance or enough personal wealth to pay well for help. Ebola requires government subsidies to combat it, and it likely won't generate commercial interest otherwise. In case you're interested, ebolacure.com is also taken, although it's owned by a company that uses a service to keep its actual name out of official Web records. More from Erik Sherman
