Archives for June 2013

Just a Few Words Please

Here is the segment I did on Squawk on the Street the other day with Rich Bernstein. Rich does good work but geez, can I get a word in?

http://video.cnbc.com/gallery/?video=3000178049&play=1

Stocks rallied for the second day in a row and while it seems like investors have forgotten about the Fed’s tapering, I don’t believe the decline is over just yet. Another 100 points in the Dow and it will be time to lighten up again.

The Times They are a Changin’… BEWARE

The latest Street$marts has been posted.

http://www.investfortomorrow.com/newsletter/CurrentStreet$marts20130623.pdf

Heading to Fox Business shortly. Should be an “interesting” discussion given the volatility and fear in the martkets.

CNBC and Fox Business This Week

I am going to be on CNBC’s Squawk on the Street on June 24 at 10am and Fox Business’ Markets Now on June 25 at 1pm.

Going out on a limb that the bond market just bottomed and is about to begin a meaningful rally. Bond proxies and like stock sectors to follow. Telecom, utilities, etc.

Volatility should be here for a while but that’s no reason to go hide in a bunker!

And Now China

Financial markets have been hit with the double whammy. First, Bernanke described the Fed’s plan for tapering asset purchases later this year and next and overnight, China reported weaker economic data and some trouble in their banking system. The markets responded with much selling on the heels of yesterday’s sell off, taking the Dow under 15,000.

The next downside target for the major stock market indices is just below their respective May lows. After that, markets are probably looking at a 10% correction or thereabouts.

Bernanke’s Successor

First President Obama says that Ben Bernanke has stayed on longer than he planned. Then he slaps him upside the head by saying that he has stayed longer than he was supposed. And when given the opportunity to walk that comment back, the president not only declines but also doesn’t give Bernanke any real ringing endorsement. All very interesting to say the least!

Federal Reserve Vice Chair, Janet Yellen, is the odds on favorite to succeed Bernanke next year and what the market is discounting. Other names being floated are former Treasury Secretaries Tim Geithner and Larry Summers, Christina Romer and Roger Ferguson, none of which are favored by the markets. Long time readers know how little I think of Geithner (disaster would be a complement), but given his desire to be with his family in New York, I doubt that he is a serious candidate. From my seat (and others) Summers is an arrogant, condescending bully who does not play nicely in the sandbox with others. It also seems like he wants the job too much.

I believe that choosing the right Fed chief depends on the economic environment. During strong times, the markets favor more of a hawk who has laser focus on inflation. During crisis times and the aftermath like today, markets are more comfortable with a dove who is obsessed with fighting off deflation. Yellen falls in the latter camp, even more so than Bernanke.

As I have said more times than I can count since 2008, I am thankful every day that Ben Bernanke and Hank Paulson were in charge during the market crisis. I may not have fundamentally agreed with all of their actions, but I firmly believe that they successfully fought off another depression. They may have been late in realizing the contagion and gravity of the crisis, but once they did, it was all hands on deck. Not to be melodramatic, but I sincerely believed they saved the almost free market financial system around the world.

Pre Fed Chatter

As expected, here was the usual spirited discussion I had on CNBC’s Squawk Box before the Fed meeting. I firmly believe that when the Fed reduces the amount of money printing, that is a form of stimulus reduction and interest rates increase. With the Fed Funds rate at essentially 0%, Bernanke used money printing as another tool to effectively have negative rates.

http://www.cnbc.com/id/100823745

OUCH!!!

Tough week for Ben Bernanke gets worse as he throws ice cold water on the stock and bond markets, hinting that the $85B per month in money printing will begin to be reduced later this year and eventually ended in 2014 with rates rising in 2015. As much as I love Big Ben, I have less confidence in the Fed’s long-term forecast than my local weatherman’s five day forecast. Bernanke can jawbone all he wants, but I for one will be SHOCKED if the Fed comes even remotely close to being accurate even into 2014.

Stocks and bonds were taken to the woodshed on Wednesday and I do not believe the selling is over…

It’s All About Big Ben

The stock market rally that began last Thursday continued into the “all important” Fed meeting on Wednesday. It seems like every Fed announcement is now hailed as the most important one ever and this one is certainly no exception. To keep everyone on their toes, Bernanke & Company changed the announcement time to 2:00pm with the press conference beginning at 2:30pm.

There has been a strong tendency for the market to close higher almost 70% of the time on announcement day since the bull market began. With so much focus on this meeting, I fully expect some wide swings post 2:00pm with the possibility for several direction changes leading up to the “real” move into the close.

It’s going to get really interesting with all time highs in striking distance but significant downside consequences if the rally fails first.

Stay tuned…

Squawk Box TOMORROW at 6:30am

I am going to be on CNBC’s Squawk Box tomorrow, June 18, at 6:30am discussing the upcoming Fed meeting and the market impact their announcement could have.

Who Turned the Lights Out?

After a nice opening by the bulls on Wednesday, the bears came out en mass to print a fairly ugly day across the board except for gold and the stocks. It looks like stocks are heading back to revisit the lows from last week which should happen in the next few days.

The stock market is now as oversold as it has been at any time since the November bottom. Failure to respond positively over the coming week would be the first real change in character for this market since last year and probably turn the trend from up to neutral at best.

Market internals have gone from overwhelmingly solid to pathetic and that usually means the next rally is one to be sold in to. Emerging markets have been obliterated with the sector now down double digits on the year which we have certainly felt in our own emerging markets strategy.

Volatility is back and the next few sessions are going to be mighty interesting!

I will be working on Street$marts shortly with the comparison to 1987 I have spoken about before.