I am sorry, but this crazy, upside down world we visit every day is making me crazy. Oh, before you go thinking I am crazy, think about the sentence below.
- U.S. stocks opened higher on Wednesday as concerns eased that the U.S. Federal Reserve would soon rein in its stimulus program.
Okay, so am I crazy? The government releases numbers that point to a backwardly revised GDP that tells us what we already knew, which is that the US economy is healing like a bull elephant seal crossing the sand just to cross the sand. It, in effect, adds nothing new to anyone’s understanding of the market and the market goes up because it now believes the Fed is less likely to taper off its QE program, or so I think.
- Stocks rose the most in nearly two weeks on Tuesday after strong housing and durable goods data reassured investors worried about the Federal Reserve’s plans to wind down its economic stimulus.
Does the above even makes sense, given that the market rose yesterday on the heels of those economic reports that suggest the US economy is actually more like a bull elephant seal crossing the sand with the idea that the water holds something he wants – food. In other words, that big, lumbering creature is purposefully and with intent moving somewhere, but he is just slow about getting there. He is not in the same hurry he would be if he were moving toward his future bride, true, but he is moving forward. He is simply strolling easily toward the water. Yet, one thing is for sure about that bull elephant seal – you can bet he will end up in the water getting something to eat.
Do you see what I mean about crazy making? I am writing about the eating and mating habits of a bull elephant seal. Oh, but that is not all. I am also reading about Alan Greenspan’s thoughts on the Fed’s quantitative easing program. Yes, I said Greenspan, the same economist that brought us the original and long lasting teardown of the Banking Act of 1933 in the late 20th and early 21st century. Thank you, Mr. Greenspan, for setting the up the great financial collapse of 2008.
Yes, I am crazy. Now I am mad at Mr. Greenspan, when, in fact, I need not be mad at all. I need to be understanding where the market might be headed. I need to be looking for clues that will support my thinking the market is out of whack when it comes to its thinking these days.
- When Greenspan acted in March 1997 – just a few months after his famous musings about how to diagnose “irrational exuberance” in financial markets – the Standard & Poor’s 500 index had been on a roll, having gained 21% over the prior six months. Investors threw a bit of a fit at having Greenspan disturb their party, dropping the stock benchmark by 6.7% over a few weeks before it rebounded to surge powerfully to new highs through July.
Yes, I have written recently that the market will come to its senses about this QE tapering nonsense, but I am beginning to have my doubts. The market is acting so irrationally now that it might just have gone over the edge with all its self-induced stress. Has it? I guess only time will tell, but I still have some faith it will get a grip and come back to a place of stability and calm. In the meantime, I am seeing bargains, bargains, everywhere, nor any stock to buy.
Now, that is crazy.
Trade in the day; Invest in your life …
