Wednesday, October 27, 2010

Speculator Class Upset with Wall Street Journal Story on Fed's Plans

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In a market hopped up on the constant drugs of federal government or Federal Reserve intervention, this morning's Wall Street journal 'planted' story, caused some sadness.  Rather than a shock and awe campaign of huge front end loaded QE, we are "only" going to get a few hundred billion right off the bat - which is funny because a few hundred billion used to mean something.    Whatever the case, the toddlers that make up the market have their pacifier out and are whining loudly.  Frankly I think this plan is genius since instead of having QE3, QE4, and QE5, we can just 'enjoy' QE2 for (nearly) forever.   Just drag it out, always have it as a threat over the market, use language like "QE will be in backpocket until economy improves materially" and backstop the entire world with it for years on end. 

  • Expectations are now growing for the Fed to unveil a program of U.S. Treasury bond purchases worth a few hundred billion dollars over several months, an approach in contrast to the central bank's purchases of nearly $2 trillion worth of bonds during the financial crisis.

The WSJ is infamous for being the place the Fed leaks.... before this new guy Hilsenrath, it was Greg Ip who they used - now that Ip has left the paper they have a new 'chosen one' to let the market know what they will do.  Because as you know, the only thing worse than crushing the backs of the middle class is making the 'market upset'.

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Speaking of, as I assessed this week Sunday night this is how pathetic things have become.  I thought Wednesday would be the only day the market could sell off.  Why?

Monday: Morning melt up - whatever happens after the premarket surge, even if it was a selloff during normal hours post 10 AM...the premarket surge always creates a nice buffer.
Tuesday: POMO
Wednesday: Could be a selloff
Thursday: POMO
Friday: Bears are afraid of the following Monday morning melt up, so step aside

For anyone who believes the market is some magical place, where buyers and sellers come together in a 'free market' to determine prices, this all just makes you sick to your stomach. 

Next week is 'tricky' because we have the elections and Fed meeting... everyone knows what is going to happen and in a normal market without a Fed "POMOing" and "QEing" us to prosperity, you would except a sell the news reaction.  Especially since we've had 2 months of rallying in anticipation of such news events.  That's how it used to work when the market was somewhat free and normal.  But this market is not close to normal so who knows anymore.

The market continues its 2 month dance along the 13 day moving average



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