The world feels like it's going to the dogs, and this week will only add further proof. There's the Big Dog Ben Bernanke who plans to bark intentions to slow down on the money printing presses while at the same time letting Wall Street know in no uncertain terms he is their best friend.
Of course Bernanke would like to think he's in charge, and it's the Street that beckons to his voice, but it's a tug of war the Fed chairman is sure to lose if he bends over too much to appease the Street. Yesterday, the stock market swayed up and down on Fed scuttlebutt.
Even though it's been telegraphed, I think there's a chance the Street will not panic with news of tapering by the Fed, and even if there is a temper-tantrum, I suspect it would be short-lived. The real interesting aspect of all this drama is the Fed hasn't done anything but pump, pump, and pump some more. There's no way Bernanke is going to do anything significant with respect to policy because it would be admitting defeat, and that would render the Federal Reserve toothless. Right now it's all about barking back and forth with the Street and hoping the economy heals itself in the meantime.
I continue to marvel at all the fuss over the Fed's next move and the doom and gloom crowd predicting the end of the rally and maybe the end of mankind. The fear is palpable, but how much is organic is hard to tell as this stock market isn't up because of the Fed but because it was oversold and big companies are leading the charge. Sure, some money is finding a home in equities, but the kind of frenzy that typically accompanies Fed-induced rallies is nowhere in sight. I speak to would-be investors still sitting on the fence, still listening to the same folks that talked them out of investing when the Dow was below 7,000.
It's really bizarre that investors have been rooting for bad news for so long that they're afraid of the day the economy can hold itself aloft. Yet, the news has gotten incrementally better although the US economy is perhaps the weakest part of the stock market rally. I continue to say the Fed money printing top comes at least 1,000 points higher.
On Friday the world's ugliest dog will be crowned in Petaluma California. The probable winner could be a Chinese Crested Hairless named Ellie Mae currently leading online voting. Before then there's a dog and pony show going on in Ireland that will see lots of sniffing, barking and lots of fleas. The only question is how much stuff Putin will steal from his fellow leaders. More jackal, hyena and fox, the Russian leader will round circles around the whole shebang.
Of course the G8 Summit is a joke and has become such a farce even the anarchists seem unmotivated. How can there be a meeting of top economic powers without China, Brazil and India? It's just another dog and pony show.
Today’s Session
The CPI report is out, and it reflects no inflation. While that may come as a shock to many of you, it gives the Fed a green light to keep the pedal to the metal or if they need to gun the engine after pulling back on the throttle- that’s Bernanke’s message.
Housing data was important as well because single family permits climbed at a faster pace than multi-family. I don’t want Americans to be apartment-dwellers…I still love the idea of the house with the white picket fence. It’s a positive sign that maybe the bounce in housing can get real, meaning Main Street is the driving force and not investors. I’m not putting down investors; they are brilliant in this case and did the nation a favor by coming in with money and not gimmicks to stop the housing freefall.
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