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Open Market Manipulation?

|Includes: Walmart Inc. (WMT)
The market was diving swiftly in response to an ugly report on consumer confidence, or lack of consumer confidence. It appeared the market was doomed for the session, and then it all turned around. So, what happened? POMO! I wrote about it this morning, and a few people are outraged at the ease at which Wall Street banks, even foreign banks, are printing money at the expense of the Federal Reserve. On one hand, you could argue that it is working. On the other hand, it's just a temporary house of cards that will tumble and splatter all over the place like the rally did earlier this year. I want investors to be in the market, but would rather it happen through real enthusiasm.

I realize such enthusiasm is a long ways off, but the seeds begin with a positive aura that takes the pessimists and makes them more than just hopeful but ready to participate. Until then, I wonder how much longer POMO can spark rallies. After today's operation, there is only one more scheduled. But, if you were not convinced about the correlation between the Fed buying Treasuries and freeing up banks to buy equities before, maybe today's action will make you a believer. The Dow was falling rapidly before POMO triggered a 90-point upside reversal. The key I guess is to keep the market buoyant until next Friday when the latest jobs report is released. It will be the last before midterm elections, and I believe it will beat consensus.

A "strong" jobs report and stock market then become arrows in the quivers of Democrats, even if "strong" jobs mean a couple thousand were created during the month.
 
Today, the Fed bought $550.0 million in TIPS from primary dealers, it was the smallest amount of assets offered and accepted since this latest phase of POMO began.

What about the Economy?
What about the pulse of consumers?


It's not that consumer confidence is not pretty, but it's getting uglier by the minute. The present conditions and expectations components of the report tumbled to the lowest readings since February. When it came to jobs, the responses were even direr.

* Jobs hard to get: 46.1 from 45.4
* Jobs plentiful: -3.8 from 4.0
* Jobs worsen next six months: -16.4 from 13.4

Economic activity in the Richmond area slipped in the most recent reading, and there were no silver linings.

* Headline: -2 from 11 (estimate +5)
* Shipments: -4 from 11
* New Orders: 0 from 10
* Backlog: -11 from 0
* Capital utilization: 0 from 14
* Average workweek: 0 from 18
* Wages: 8 from 13


The Market


I like the action, but the bounce isn't luring anyone off the sidelines.
Wal-Mart is a Headline Stealer this Week
By: Brian Sozzi, Equity Research Analyst

Following Wal-Mart's (NYSE:WMT) announcement yesterday that it offered $4.7 billion to enter the South African retail marketplace via MassMart, the country's labor unions have awoken. Below are some of the debates emerging:

1. Debate one: It comes with the territory in South Africa, which has a history of worker unrest. Investors should be aware of this (market should reflect all available information after all), in which case Wal-Mart's stock is not impacted.
2. Debate two: Investors become jittery that Wal-Mart will have to pay an even higher price to obtain MassMart, and then when the deal is closed, pay the worker base higher wages. This would conflict with the Wal-Mart business model, which is to keep wages under control and drive lower prices. One key thing in this deal is for Wal-Mart is to gain share through increased volume which comes from lower prices (or applying its "productivity loop" mantra). So if volume slips, and worker wages are high, that would be negative from a return standpoint.
3. Debate three: The concern in South Africa reignites debate that the company's U.S. stores should be unionized. Wal-Mart wouldn't even want to go down that public relations road again as it has quieted down (mostly as a result of Wal-Mart being there in time of need in 2009 with affordable prices).