The scrupulous and the just, the noble, humane, and
devoted natures; the unselfish and the intelligent may
begin a movement- but it passes away from them.
They are not the leaders of a revolution. They are its victims.
Under Western Eyes
Has mankind arrived at the same place at the same time around the entire planet? On so many levels, powerful forces are attacking the incumbents and questioning the ruling philosophy and the status quo. It's not good enough to deliver the goods, but it seems leaders must also deliver more humility. Arrogant and good means you could be arrogant and without a country, company, or control of policies. This is how the week is unfolding, but it's been the overarching tale of 2013 - revolutions turning on those that lit the first torch and barked the first orders to overcome odds and embrace the impossible.
I'll begin with Ben Bernanke since the Fed is topic number one and the Dow was pounded for a two hundred point loss in yesterday's trading.
Big Ben isn't your conventional bad guy revolutionary. I doubt he's ever worn a beret or smoked cigars from a jungle hideout. He doesn't look like a gun enthusiast and probably hasn't had a fistfight since middle school. He hasn't ordered torture or destruction ... unless you're talking about economic. When it comes to Bernanke his revolutionary moves at the helm of Fed will eventually cut a swath of destruction that could put America on the brink. I don't think it's too late to reverse course and coming up with a timetable is folly - don't even try.
Now, the Fed chairman is scurrying about running from his creation but with nowhere to hide. The Fed offered up a bunch of numbers hoping to erect a barrier and possibly buy time but it only made things worse. Of course like so many global uprisings there are different camps with different beefs. The crowd that thinks only the Fed can save the day, worry about how phony the economic data is, and realize the next time unemployment hits 6.5% it will be distinctly different than the previous time because of all the people that have dropped out of the work force.
Moreover, the quality of jobs being created these days is worse than in any other recovery - lots of college grads flipping burgers.
Then there's the crowd that thinks the Fed shouldn't exist in the first place (put me in this group) and understand any benefits from money printing are ultimately eliminated by drastic inflation, loose economic foundations and the emergence of bubbles. We aren't there yet in housing or the stock market because there is no velocity to all that printing. In other words all that cash is getting sopped up by banks and very healthy organizations that don't need but can't resist taking advantage. I don't blame them.
Yesterday Big Ben managed to anger both camps in the process and you could call him the victim of his own revolution.
Not a Good Look
Maybe it was his moonlighting as the world's most interesting man, as George Zimmer was canned by the very company he founded and fronted as the main pitchman. His "you're gonna love the way you look" had become iconic so what the heck happened?
The company just posted strong earnings and I just told people on TV I though the stock was worth owning in part to management!
I must admit I wasn't too thrilled when Zimmer wooed Occupy anarchists in Oakland, thought it was the very worst kind of pandering - but respected him as a businessman. Men's Warehouse MW is off its all-time high of $53 back in May 2007 but up nicely from the low of $11.65 in January 2009. Plus, the way the whole thing went down ... ugly! It is just not a good look.
High profile founders and CEOs are getting the ax a lot lately even when it seems they're doing great work. Christine Day of Lululemon LULU is probably biggest head scratcher, and while dumping Andrew Mason of Groupon wasn't farfetched his tenure as public company CEO was really short. I'm not sure these executives are victims of their own revolutions or empowered boards that have a public mandate to throw the bums out... even the great ones.
Then there's the world of politics and global protest. Rich and poor nations are feeling besieged and burdened and unfairly treated.
Officials in Brazil have decided not to increase bus fares by ten cents. The quick reversal could either A) placate protestors or B) empower protestors to make additional demands. It wasn't fancy footwork by any means but a quick dance that should at least allow that big time football (soccer) tournament to go off without a hitch. I bet a similar compromise happens in Turkey, too, where a small patch of city park almost toppled the most impressive nation in the Middle East this side of Israel.
World leaders that open markets, educate their citizens, and grow prosperity often stay in power for less time than those that are brutal and backwards (unless they're dictators that happen to understand parts of capitalism). Victims of their own revolutions? To a certain extent they are.
The market will open under a fair amount of pressure as the Street grapples with the Fed's next move, or better yet when that next move occurs. The question is whether the Fed really sees a better economy or is it afraid of its policies and sees a shift in risk-reward composition. It's unlikely the Fed would admit defeat, but there's no way there's comfort with the economic rebound. This morning's economic data release underscores how flaccid this recovery has been.
Initial jobless claims higher to 354,000
PMI 52.2 down from 52.3 and below consensus estimate of 52.7
I don't think the Fed is going to do anything significant with respect to policy for a long time. But, let's watch the shakeout from the sidelines this morning.