Jun

22

One should interpret all this negative news as nothing more than the foundation for the Fed to do something very bullish for stocks.

George Humbert replies skeptically:

  1. During the BSC take-down, DC actors wished to inflict the maximum pain on equity holders. Is their bloodlust sated?
  2. It is an open question whether or not a given flow of rate moves and rhetoric can/will drive US equities. The Bearded One, foolishly, tried to talk up the dollar, and failed. He did succeed in wrong-footing the forward rate curve, triggering unknown billions in losses around the world. Is it likely he'd get stocks right?
  3. Are rallying equities in the Fed's interest? The one area where Bernanke has really excelled is in extolling socialist nostrums, providing rhetorical cover for State expansion, and specifically growing the Fed's book of administrative powers. Would not a Black Monday 1987 redux strengthen the case for more and more Fed control over capital markets?
  4. No doubt, looking back in time, the best equity returns followed doomsdayish dramas such as those we've seen in the past few days. I merely wish to note that the interests of actors inside the Beltway may be in a cycle more exceptionally inimical to capital than those seen in prior episodes.

Victor Niederhoffer notes:

Two other bearish memes before the Fed meeting: the Case/Shiller index and consumer confidence will be announced today (6/24). The latter is 100% correlated with S&P last month and the former is even more consistently bearish than the weekly financial columnist. But is this good or bad before the Fed meeting?


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