The Central Bank intervention crowd, touting their “Don’t fight the Fed” mantra, has kept a bid in the market most of the year. At least, that’s one reason to be long. Other investors stay long due to the strong January and the election year statistics. There are other reasons to be long, yes, but the cliff divers have the whole European turmoil debt calamity making a strong case for calamity and stock market devastation. Then there’s our bloody strong dollar. STRONG DOLLAR MEANS STRONG ‘MERICA.
So we have a strong dollar, we could devalue that puppy and get some asset inflation. But with corn fields north of the bible belt turning into hot concrete better used for figure eight demolition derby racing, a farmer’s favorite pastime, and the strong jobless print this morning, is it time take the QE bid out of the market? Yesterday’s Fed minutes also communicated a lack of consensus regarding monetary policy. By my understanding the corn situation causes real supply based inflation, not the light and fluffy stuff Ben likes to toss on fans over at NYSE. Am I jiving these recent developments properly?
Now we have earnings. Are strong earnings bearish on stocks, because they lessen the ability of the Fed to act? I want to see stocks trade based on individual merit, but we’re in a correlation based market right now. Seeing how surprise earnings announcements are treated may give guidance to our line of thought.
One thing I do know: US dollars are in beast mode. Euro trip anyone?Comments »