Hold off on the Harlem Shake for now. The Dow Jones industrial Average came tantalizingly close to clearing the old all-time high, but it stalled like one of those reality television shows that uses the same gimmicky build up before going to commercial break.
Today we'll be back from commercial, but the question many are asking is just how much of this rally is reality and how much is manufactured enthusiasm brought to you by the Federal Reserve and runaway government spending?
I think there is Fed free money in the mix, but we aren't near the hysteria part of the equation where that money finally flows out of banks and into the economy. It's helping housing more and propping banks for the moment, but it's not the main reason for this stock market rally.
I still think it's about corporate earnings driven by overseas profits.
When that Fed money really hits the stock market, doubters will become believers; and that's when I'll be really afraid. There will be strong volume and water cooler talk will shift from last night's game and parking spot allocations to hot stock tips - the best stocks to buy with no earnings.
Right now there are too many deniers, so I'm waiting for everyone to shake their tail feathers, baby.
Hysteria - Best Dance Music
The original Harlem Shake is said to have been inspired by watching people shot in the legs squirm. After a week of listening to doom and gloom from politicians, I felt like the first person to do that dance back in 2001. The fear mongering reached fever pitch with a warning from Congresswoman Maxine Waters of California. She claims 170,000,000 will lose their jobs over sequestration. Wow, that's a lot more than the net 3,000,000 jobs gone in the last four years. Heck, it's enough to make a person actually stop and scratch their head. I knew republicans were mean, but they are trying to not only get all 134,000,000 workers fired, but want millions rehired so they can be pinked slipped again.
I guess that was the last ditched attempt to force more tax hikes, or as some would call them, more compromise as Congress bolted last night for a three day weekend ahead of all those cancelled airline flights (smart move). I can't believe how much work went into creating real mob scenes over a 2% cut in planned spending hikes that only lessen increases of spending, not actually cut money coming out of the treasury. Of course, now there is a convenient excuse for any hiccups in the economy, and believe me, there will be hiccups.
In the meantime, the countdown begins to the largest wave of layoffs known to mankind. I have to say, Representative Waters has given me a lot of great laughs over the years, especially her confrontations with Alan Greenspan, but this was beyond the pale. Perhaps it was panic, seeing the market rally and the White House take a softer stance (tough predicting end of the world and it doesn't happen). She must have figured they were using matches when a blowtorch was needed. The market didn't pay attention even though the rally faded hard into the close.
For now the stock market is focused on the bottom line, and that's being driven by global prosperity.
At some point the US economy has to be a contributing factor to stocks. In the meantime, it will continue to be a contributing factor in the politics of blame. It's nothing to sing about and doesn't make me want to dance.
It was a foregone conclusion today would be a jittery session, so stocks look to open lower. A disappointing report on personal income last month isn't helping. But it's the culmination of all those scare tactics that cast the greater shadow over the market. I would love to see a lower open yield to midday buyers, but for the moment let's hang out on the sideline.