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Yesterday, Rick Santelli caused a mini-panic in the US equity markets with his "wink-wink news" that there was a buzz in Chicago that The Wall Street Journal's Jon Hilsenrath was going to publish an article this morning with a scoop that the Fed was stepping of the QE pedal. Within seconds the US equity markets dived off the cliff, leading to a mini-panic of sorts. Is that responsible journalism or fear-mongering at its best?

Let's first sort through the effect of such news. Who gets affected the most? Is it the mega hedge funds? No! Is it the big money center banks? I think not. Is it the big mutual funds? Don't think so either. So why did the markets take a dive? Did I hear you say Main Street investors? Bingo! Did I hear you say retail investors? Spot on, mate!

Now, even if Hilsenrath did write an excellent article about how and why he thought that the Fed was taking their foot of the QE pedal, did anyone stop to think and consider one important fact? Federal Reserve Chairman Ben Bernanke is scheduled to hold his press conference at the Chicago Fed at 9.30 am eastern Friday, and if the article did hit, would he not be forced to clarify the Fed's stance? In addition, just in the last Federal Reserve minutes, the statement said that not only was the Fed committed to the QE program but stood ready to expand it if condition warranted. So, is there really any need to clarify the massive, sudden and global impacting change in stance within a few weeks? If indeed Hilsenrath is true and is (supposed) article does hit, yes the Federal Reserve would have some "splaining to do, Lucy".

If the stance of the Federal Reserve would to change in a matter of a week or so, global markets would swoon like they did in the worst of the financial crisis. It would be the anti "party like its 1999." With a few weeks of decent economic data here at home and maybe in certain Asian economies, backing off QE now would be the worst move the Federal Reserve can make. Europe is still teetering and Japan is by no means home sweet home, baby.

Most of the Federal Reserve policymakers are in favor of QE currently being carried out through weekly bond purchases however, there have always been policy hawks and there always will be. One one side you have Chicago Fed Reserve President Evans who believes that the Fed should continue trying as hard as they can to turn things around and although the labor market is improving he thinks the Fed should not back off any time soon. On the same side you have St Louis Fed head, Bullard to actually feels that the Federal Reserve needs to add to the current stimulus to fight against possible deflation here in the US of A. On the other hand, you have Philly Fed Head Plosser who thinks QE has had a limited effect on the employment and labor markets. In addition, he is one of the hawks who believes that the Fed needs to slow the pace of the QE program.

So now, it comes down to Federal Reserve head honcho, Ben Bernanke, who will speak early on Friday morning.

Let's not forget that the rapidly rising dollar and the sinking commodity prices also had a lot to do with yesterday's schizophrenic trading in the US equity markets as well. However, that is for another article.

The central question still remains: Was Rick Santelli rumor-mongering or was he passing down useful information?

Keep the comments coming and keep it interactive.

As always, happy and safe investing.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Source: On Being Rick Santelli