Janet is now picking sectors. This is beyond weird! She basically called out social media, biotech and small caps. Apparently the Fed is now in the business of picking sectors. Clearly they want to now control the structure of the market and they are basically trying to engineer a controlled correction without affecting the rest of the market. The question is should investors ignore this or do we follow the maxim of “Don’t fight the Fed?” Let price be your guide on the expensive stocks. We have really entered new territory. The hubris of the Fed and its belief that they can micromanage a correction is stunning. I think it is about to get very interesting. Watch 1950 on the S&P. If we take that level out over the next few days then this correction has legs. Otherwise it is noise.
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yeah, i’m simply stunned by what she did. A micromanaged correction taking out the russell and preserving the S&P is almost a generational play because she’s trying to defend the older working class and senior citzens since their portfolio make up will be much different than say the typical iBankcoin’er under the age of 40.
matt_bear
This has truly become a casino. The question is can they control the spill over.
CYNK valued at $4-6B with zero revenue – Janet may have a point.
First of all, Yellen didn’t write the minutes which called out those sectors. 2nd, Greenspan did this all of the time (irrational exuberance). 3rd, clearly the Fed can’t do anything right in your minds….example
1) The fed says nothing about valuation…your response: “Look at the bubbles they are creating by all of this paper printing!”
2) The Fed mentions two small sub sectors (relative to the market) are stretched in terms of valuation…your response, “How dare the Fed ‘micromange’ a correction! They are controlling the market!”
Micromanaging the monetary policy IS there job, and it always has been. I thought you people WANTED the Fed to stop creating bubbles….the first time they try to actually say something (not do) about areas of overvaluation, and you rip them apart for it…ridiculous
forget alpha,
i love money printing. I made a ton of dough since may of 2009. I have gone bearish in January. I don’t know why you keep talking about me hating the Fed. I am just pointing out that these central planners are giving you a tell. But it is absurd to jawbone certain sectors down. You clearly have a reading comprehension problem. Last i checked they are going to reduce the money printing and are talking about raising rates. We are in month 64 of current bull. The bull is aging. I just don’t think the Fed is omnipotent and once the decline begins in earnest they will be powerless to stop it.
How do the small caps not crater now? This is the second time the wizard has proclaimed them a sell. Are the markets so completely rigged that “they” can stop the slide when ever “they” want?
bluestar, what have you done since January..besides move your family to Maui((NICE))?
Many(bearing exceptions) have done exactly what you have stated here..”I made a ton of dough since may of 2009 (some jumped on the lows of March 2009..tips hat).
You continue to state …”I have gone bearish in January.” Umm, January 1st or was it January 31st? Well..5.5~6.5mths(give or take a month) later..and you claim the world is finally going to come to an end?
HMmmmmmmmm?
Would love to see your positions(past).
Love forgetalpha’s response..
Thanks for that^
Mate you are right…
My ‘This is nuts’ filter has been going off consistently all year.
Everything screams ‘top of cycle’, and even the ‘this is different’ stuff is bearish by itself (see corporate buybacks)!
If I hadn’t dusted so much cutting back longs to zero and overloading the overlay I would still be buying downside protection…
But it just wont roll over which scares me more.
Oh well, if you can’t beat them, join them…
Off to find the next CYNK.
ironbird,
people forget they were trying to stop the 2008 crisis for most of that year but yet the markets cratered anyways. the feds omnipotence is only works as long as people believe it. The cycles of the market will eventually assert themselves. question is when.
sooz,
I went to cash on 1/15. I started shorting in march. I was up 9% at the time of the lows in may. i got my face ripped off and now I am down 4% YTD. I have small put positions on while mostly cash.
EALW,
The scariest thing is that most of my friends in the business who manage other peoples money think this is nuts but dare not sell for fear of losing their job. I think when this cracks it could get ugly fast.
forgetalpha:
this is not an attack, so pls don’t take it as such, but a few comments.
1) to my knowledge, those “small sectors” of equities were not in the prepared remarks. she felt obliged to include them in her presentation. if that is not correct, i apologize. if it is correct, i would obviously steer far away from those areas.
2) I would not refer to the leveraged loan market as being small or unimportant in any way. That is the dynamite, and you don’t want to light that fuse.
Bluestar I’m with you here
“people forget they were trying to stop the 2008 crisis for most of that year..”
Some people also remember that they were completely ignoring the problem back in 1997ish(over heated real estate)~2005 when many shops were offering loans(big azz cash)to those that could not even make their first installment..
Give me a ‘Got D@mned Break'(sic)
This all began to unfold back in 2005(ish) as a witness of foreclosures around this joint.
sooz
Yes I agree but once we rolled they could not stop it. thats my point.
…and this B@stard got away with destroying many peoples lives.
Mozilo’s compensation during the United States housing bubble of 2001–06 later came under scrutiny. During that period, his total compensation (including salary, bonuses, options and restricted stock) approached $470 million.
http://en.wikipedia.org/wiki/Angelo_Mozilo
Sooz,
He should be in jail. the problem is if he goes they all go. every wall street bank securitized his fraud and they knew it.