With Latest FOMC Statement Released, Will or Won't the Fed Raise Rates?

The CNBC 'Fast Money' traders discussed the Fed's FOMC statement, before turning their attention to earnings from Keurig Green Mountain and Salesforce.com.
By Bret Kenwell ,

Stocks soared on Wednesday, with the S&P 500 ETF (SPY) - Get Report up by 1.65% following the release of the Federal Reserve's FOMC Minutes statement. 

The release could have been interpreted either dovishly or hawkishly, Brian Kelly, founder of Brian Kelly Capital, said on CNBC's "Fast Money" TV show. Basically, investors are interpreting the Fed's policy to be not too tight, and not too loose at the same time. 

Guy Adami, managing director of stockmonster.com, added some color, saying the Fed could raise rates in December -- and should do so as to not lose credibility with investors. But after the first hike, it could delay raising rates for 9 to 12 months, thus getting the first rate hike over with, while at the same time, delaying a future rate hike for some time. This would satisfy a lot of investors. 

Kelly added that investors should stay long the U.S. dollar, which will likely continue to rally longer term. Pete Najarian, co-founder of optionmonster.com and trademonster.com, said financial stocks should continue to rally too, especially if the Fed raises rates. 

Steve Grasso, director of institutional sales at Stuart Frankel, said he doesn't think the Fed will raise rates in December, as stocks continue to rally and the utilities sector -- which usually climbs in a rising rate environment, despite what many investors would assume -- has been trading poorly as of late. 

Peter Schiff, CEO of Euro Pacific Capital, noted that the FOMC statement doesn't give investors much clarity on whether the Fed will raise rates this December. He doesn't think the Fed will, because although it doesn't want investors to feel the same way, the economy is in fact, not that strong. 

The Fed keeps making excuses not to hike, when really, Schiff thinks it's because the U.S. economy cannot sustain higher rates. Investors love the idea of more QE and "easy money," he said. As a result, stocks keep going higher. "This is a bubble... not a recovery," he added, explaining that the U.S. will eventually meet face-to-face with sovereign debt and currency crises, which will be worse than the financial crisis of 2008.

The conversation turned to earnings, after shares of Salesforce.com (CRM) - Get Report climbed 5% after beating on top and bottom line earnings estimates. 

Adami said investors should stay long Salesforce, despite the stock having a lofty valuation. Some stocks, like Amazon (AMZN) - Get Report and Netflix (NFLX) - Get Report , continue to trade well, despite high valuations. Investors can add Salesforce to the list.

Adami added that it would still be a good idea for IBM (IBM) - Get Report to buy Salesforce, although the former has likely already missed its chance to do so. 

Shares of SAP (SAP) - Get Report are likely to start catching up, as they are up just 14% on the year compared to Salesforce, which is up 30%, Grasso said. 

Keurig Green Mountain (GMCR) also reported earnings. Despite seeing brewer sales fall 32% year-over-year and coffee pod sales dropping 9% compared with a year ago, the company still beat on top and bottom line estimates estimates and the stock popped 18% as a result. 

Before the big rally, the stock hit a new 52-week low in Wednesday's session, Najarian said. At some point, it might make sense for Coca-Cola (KO) - Get Report , which already owns a sizable stake in the company, to fully acquire Keurig, he said. 

Grasso didn't like anything about the earnings report, saying he would be a seller as a result. Kelly is avoiding Keurig as well, as competition heats up. 

Herb Greenberg, partner at Pacific Square Research, pointed out that the stock is down 23% over the past five trading sessions, so the stock is just regaining some of those huge losses. Keurig Green Mountain will no longer provide quarterly guidance, which is never a good sign, he added. He critiqued management's execution and reasoned that the business still appears to be broken.

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