Thursday Outlook: Through the Looking Glass

If I had a world of my own, everything would be nonsense. Nothing would be what it is because everything would be what it isn't. And contrary-wise; what it is it wouldn't be, and what it wouldn't be, it would. You see?
- Alice in Wonderland

Let’s face it; logic isn’t to be found from the news. And, if you can’t make any sense of anything, making bold predictions-a hazardous pastime anyway-is impossible. If you turned off all news sources and just watched the tape and inspected charts, everything would look basically okay for the major indexes. A 5-8% fall in some since October highs is nothing to get excited about, right? But, given the news, you’d think the market would’ve crashed by now. That is not permitted, methinks.

Bernanke was the headline speaker on Wednesday but his comments were well foreshadowed by his second in command, Vice-Chair Kohn, yesterday: “We’re going to cut” and that’s that. Inflation? We’ll deal with it later. That’s a green light for gold and a kick in the teeth for poor Uncle Buck.



As was implied yesterday, if they don’t give a rip about inflation now, there must be something really scary going on that we don’t yet know about. Ask yourself, are interest rates too high? Not a chance. You should be concerned about what may lie beneath. If there isn’t much, then this group of financial officials should be tarred and feathered for reckless oversight.

Breadth and volume Wednesday were unremarkable.































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Comments

[D333GS:]

Speculate. What do you think is going on behind the scenes that we can't see ?

2008 Feb 28 07:17 AM

[DrMark27:]

I loved seeing the $VIX and the $NYMO included today... thanks!

2008 Feb 28 07:44 AM

[iai:]

"there must be something really scary going on that we don’t yet know about. "

***They fear what happened to Japan in my opinion. What's worse than rapid inflation? Deflation. That's what I feel the fed is afraid of. Shrinking credit and insolvency is deflationary.

2008 Feb 28 07:59 AM

[fjd10595:]

user 158..... has it right, the fear is Japan style deflation. David, you usually have good insight, but you are a little off the mark when you say something like "there must be something scary that we (the public) don't know about". I've heard similar comments by others at times, and I don't accept it. Doesn't make sense. What might the Fed "know about" that the rest of us don't know about? Their forcasting is just as bad as everyone else's. Now if you told me that they can and do manipulate data that they control, that is a different story. But I'm not sure that they can "know" something that we don't.

2008 Feb 28 08:36 AM

[David Fry:]

"they fear what happened in Japan..." Well, that's a good explanation and shared by others. I wouldn't disagree. There does seem to be a sense of urgency since they're so willing to let inflation run. That indicates perhaps a problem of some magnitude lurking that could surface soon. If not they're being quite irresponsible since the level of interest rates is NOT a problem.

2008 Feb 28 08:41 AM