Thursday Outlook: Ignore the Talking Heads

by: David Fry

I make it a practice not to watch financial TV during market hours [Sacred Cow II] since it can distract you from your disciplines. But, yesterday like most in the trade, I watched the Fed interest rate decision. My choice was Bloomberg since they “can” be more focused. But I found their panel disappointing.

After comments from the mostly 'positive' panel, they went to the bond pits and spoke with someone whose contribution consisted exclusively of, “…we have a lot going on.” Gee, thanks!

Then came Paulson followed by Bush. By 3 PM I switched the TV off after learning absolutely nothing other than stocks were rallying, bonds were selling off a bit and the dollar was tanking.

The bullish dye seemed cast since the Fed statement started off: “Financial markets remain under considerable stress…” So, they’re primarily worried about stock market prices and credit conditions, seemed the conclusion. They’re not very concerned about inflation saying, “The committee expects inflation to moderate in coming quarters” then added as an afterthought, “…but it will be necessary to continue to monitor inflation developments carefully.” Sure. How many times have they thrown that boilerplate statement in?

Upon returning at 4 PM, buying had reversed and equity markets closed in the red. So, this is another example of waiting Mr. Market out, turning a deaf ear to the talking heads and sticking with your systems whether they are fundamental or technical.

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