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7/12/2012 7:55 AM
Market and Investors Rollover and Play Dead
By Charles Payne, CEO & Principal Analyst
Reading the Fed minutes reminds me of a reward poster for a lost dog that some would have assumed was lost on purpose. The release wasn't news per se but it was a reminder that the next tranche of free money will only come with more pain. Even though the economy is ugly and flea-bitten, it's still attractive enough for a majority of Fed decision-makers not to pull the trigger on more accommodation.
The Fed began its minutes with a view of the obvious, so silly as to almost be humorous. Concerns outlined included:
-Concerns about Europe
-Weaker-than-expected economic data in US
-Deterioration in investor sentiment
-Lagging equity prices of large banks
What threw the market for a loop and Wall Street into a hissy-fit was these back to back observations.
A few members expressed the view that further policy stimulus likely would be necessary...
Several others noted that additional policy action could be warranted if the economic recovery were to lose momentum.
So, several are more than a few and that means the economy isn't ugly enough just yet. The idea of getting ahead of the curve is less important than getting it right. I'm not a fan of money-printing, yet there is no doubt it's a game and largely it's a game that the Fed has been all too happy to engage in. Heck, when pointing out investor sentiment the minutes note a complete collapse was tempered in part by expectations of further policy accommodation by central banks and measures in Europe to address their fiscal issues. The Fed understands its power to move markets through action and body language but plays a dangerous game of too many head fakes.
You can't get the market hooked on free money and then snatch the punch bowl citing a string of obvious concerns.
Real Wall Street veterans should know better but most have become Pavlov's dog, yelping for the same stuff as everyone else - free money, now! As things stand now, this dog of a stock market may have to become mangier, limper, with a bigger hole in the head and blind in both eyes before the Fed tosses us a bone.
In other words, we have to sink further before we can be Lucky.
Industrials are looking vulnerable but so, too, an eclectic combination of sectors. Calloway Golf is laying of 13% of its staff in what is yet another major sign rich people are either running low on cash or moving back into a bunker. On the other hand, super market stocks aren't so hot, either.
With hope of easy money slipping away the market is like a rudderless ship. This cloud means overreactions to disappointing news and indifferent reactions to better-than-expected news. The Fed isn't completely out of the picture but this could be a summer of discontent without something bold from them.
For the moment it's not about value but the idea of the market holding on until powerful entities prove they get the problem and see solutions.
This morning's initial jobless claims number came in better than expected, not impacting the market much although the freefall has stopped.
|The mere existance of Mitt Romney has his critics up in arms....jet ski or no jet ski!!!|
Mary Ann on 7/12/2012 10:38:13 AM
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