Why the Fed matters.

See if you can pick where the Fed press conference was on this 5 day chart of the S&P?  Soon as we start going up volume drys up.

Before the Fed had to actually do QE and QE2 to make the market move, now they just hint at it and we get the same effect.  Here's the fun part no ones seems to talk about.  QE3 what's the cost?  See if you can spot where of this 5 day chart of the UUP, dollar index etf, the Fed conference was?  So are stocks really going up or is the dollar going down and since stocks are bought in dollars the price is just adjusting for a dollar that's value is declining.

Dollar goes down guess what goes up.  Everything else.  Here's the oil chart.

Coming Week

Everything in my mind says sell except the price action.  Right now the Dow Futures are up 60 points after Friday's insane move up.  Housing bad, Unemployment bad, GDP going down, etc S&P goes up.  But you cannot fix stupid, so I'm not a seller yet but if the upward momentum waives it's time to leave the party.

?

So GDP estimate's continue to drop, we're down to 1%.  And now the Nasdaq is up 2% today.  I'd love to hear why?

Fed Friday

Well Bernanke didn't say QE 3 and down we go but its not a panic or at least yet.  Maybe because they did use the carrot out there that if things do turn bad they can jump in later.  So we're still bad news is good news and good news is great news.

http://en.m.wikipedia.org/wiki/Greenspan_put

Morning Thoughts

Just like before http://marketvent.blogspot.com/2011/08/unemployment.html.  today's initial unemployment number for last week was revised up.

Fun fact Apple accounts for about 15% of the QQQQ.  How well did Microsoft do when Gates left?

Morning Trade

And we're back to my favorite mind set good news is good news and bad news means the Fed will have to save us, so that's good news too.  Basically everything goes up.  Looks like my thought that nothing would happen was wrong.  http://marketvent.blogspot.com/2011/08/fed-friday.html

USO

On July 20, 2010
USO - 34.82
Oil - 77.54 - or settlement of front month CL futures contract at that time

July 20 2011
USO - 38.40
Oil - 97.80

USO - 10%
Oil - 26%

Really

Today is one of those that just makes me mad.  Nasdaq was up 4% at one point.  So there must have been some change in the world and that made stocks cheap.  Lets see

Housing - http://finance.yahoo.com/news/Newhome-sales-fall-2011-could-apf-3845011766.html?x=0&sec=topStories&pos=5&asset=&ccode=

Europe - http://pragcap.com/cds-market-to-euro-banks-this-is-worse-than-2008

Bonds - http://www.zerohedge.com/news/4-week-bill-auction-closs-0000-bill-rates-now-negative-through-november

US Banks - http://www.zerohedge.com/news/bank-america-scrambles-defend-itself-henry-blodgets-allegations-it-massively-undercapitalized

But don't worry the Fed will fix everything so up we go I mean look at the track record it's been awesome.

Here's my thought.  The current GDP was at 1.3 last time the number was put out, since then the NY, Philly, and Richmond Fed numbers have been under estimates by a factor of 10ish so if consensuses is GDP down .2 or so we may get a 0 or negative print next time.

Morning Trade

These morning rallies have been good spots to sell for the last 2 days, can we make it 3?

Fed Friday

It's all about Jackson Hole now.  The Fed meeting this week and the press conference on Friday will basically define the future.  The market seems to be betting on QE3 of some type, more treasury buying or something new, maybe we'll just start paying taxes directly to Citi cut out the middle man.  I think it can go a couple different ways.

1.  New "spending" is not really politically feasible right now as congress barely got the debt ceiling through, so I'm doubting they let the Fed increase it's balance sheet at all.  So Friday comes and the Fed does nothing and the market falls off a cliff and then the next day congress acts to save the day because no one gets reelected when the market crashes.  Basically the same thing that happened with TARP where congress votes no Dow drops 700 points and then the next day it gets voted through.

2.  Fed just does it anyway and congress goes crazy, but the market fly's up and so everybody just lets it go because people do get reelected when the market soars.

So basically I don't see any one making any real big moves until Friday, assuming a European bank doesn't collapse by then.

Morning Thoughts

So right now the 10 Year Treasury is down to 09 world is ending levels.  Last time it was this close to 2.00% the S&P was below 700.  So who's right, bond market or stock market?

PPI

Hooray inflation's back just like the Fed wanted.  Business school 101 inflation goes up stocks go up.  Wait what?

Conspiracy Corner

And now it's time for conspiracy corner. (Cue Mr. Rogers' style music)

 So the one world government idea took a step forward today, EU Government.  Creating the Euro involved having every country abide by the same monetary policy with the European Central Bank, but every country had it's own fiscal policy.  So, countries could do whatever they wanted with their budgets, taxes, bond, etc.  There were constraints but obviously those didn't stop anybody.  It was inevitable that some day one country would cause trouble and what then?
That's where it's at now, does Greece and Italy get booted from the Euro, does everybody leave the Euro for the old one country one currency, or do they move towards a single EU governement?  Looks like they're choosing one EU country and one step closer to one world government or so the idea goes.  I'm not sure putting France and German in one country is a good idea or one that would last that long, but we should invade Canada just in case.

Monday Recap

Thursday's post seems to have been close enough, http://marketvent.blogspot.com/2011/08/afternoon-trade.html, but with the NY Fed Manufacturing numbers from Monday morning the S&P is looking expensive here at 1200.  Might be time to lighten up again.

Mortgage Rates

With the 10 year Treasury yield down in the two and a quarter range mortgage rates have falling to a crazy low, 30 year fixed is well below four and half.  Great time to refinance for everybody the interesting situation that arises is now the US has millions of mortgages locked in at say 4.5% for thirty years, or more appropriately said Fannie Mae and Freddie Mac will have all these loans on the books, since they own 90% of the mortgages in America.  Now the interesting part is if the Fed ever starts to raise interest rates in the future what does Fannie do with the loans they have that are paying less then say the 10 year bond?  Right now everything is fine but what happens if we ever need to go back to a more "normal" rate.  Fannie will have a book full of loans paying 4.5% in a 5% world.

Love that oil price

See if you can spot where the Fed annocment was on the chart of oil price this week.

Afternoon trade

If we get above Tuesday's high of 1170 on the S&P there will probably be a run to 1200.  If we cannot break that then call 1100 to 1170 the new range and we'll bounce around there for a while.  As with the last couple days it's all in the last hour.  If it gets near 1170 and then pauses and starts to come down that might be a good place to sell out today.  Retail sales tomorrow morning can really set the direction for Friday.

Unemployment

The weekly initial unemployment numbers came out and were under 400k USA USA.  But wait last week's number got revised up?  Normally when you have an estimate you error on the high side and the low side randomly not always low and then revise later like we get every week with this job loss number.  You have to go back to March 3rd of this year to find a time when the previous week's number wasn't reset up later.

Really? Apple?

So apparently it's offical now the world is ending.

Exhibit A
http://finance.yahoo.com/news/iPads-trump-oil-Apple-is-most-apf-3276362092.html?x=0&sec=topStories&pos=main&asset=&ccode=

Exhibit B
http://blog.moviefone.com/2011/08/10/a-very-harold-and-kumar-3d-christmas-photo/

Good to know that oil is no longer that important.  See we're moving to a greener tomorrow and didn't even know it, but it won't matter since I'm pretty sure a 3d Harold and Kumar is the Third Horsemen of the Apocalypse.

Afternoon wrap up

It's all in the last hour just like yesterday.  Rest of the day was irrelevant.

Here's a fun fact

This has to be the best named IPhone app company out there. 

http://waterclosetgames.com/

Ron Paul Morning

Always fun when Ron Paul is on CNBC in the morning.  Here is the clip of him asking Bernanke "what is money".
Ron Paul what is money question.

Really Apple

http://online.wsj.com/article/SB10001424053111904007304576498384081275152.html?ru=yahoo&mod=yahoo_hs

And this is why I started this, so I can say, Apple seriously the biggest company in the world?  They make cell phones and really big cell phones and maybe an overpriced laptop somewhere too.

(AppleTV is at least useful)

Fed Tuesday

Market collapses Monday and then overnight China CPI comes in a little hot at 6.5 and the S&P futures drop below 1080, Oil falls 5 dollars to 75 as everyone assumes this means China will have to pull liquidity out again.  Tuesday starts off up a little on an oversold style bounce for basically all "risk" assets and proceeds to play wait for the Fed at 2:15.  Fed statement comes out and down we go then straight up 70 points in an hour?  Wait, what.  Fed tells you they're not going to raise rates for 2 years hooray.  Or put another way, the US economy won't see any growth for at least 2 more years booo.  That equals bad in my world not 70 points straight up good, but never underestimate the markets ability to misunderstand Fed policy decisions.

You can see the drop after the Fed statement then 2:40 straight up into the close.

Why

The point of this is to give a forum to basically piss and moan about things in the market that just don't seem right, and no time like the present to start posting.  This has been a phenomenal week to start with as the Dow was down 600 points, for no good reason on Monday and then back up 400 points the next day on what should be terrible news.