As I type, Dow futures are pointing to a 200 point opening for tomorrow morning. And no, it's not about America agreeing with Russia on what to do about Syria, or some leak from the Fed that they're pushing back the anticipated QE taper. Stock futures were essentially flat until moments after the news that Larry Summers has bowed out of the race for the Fed chair was released. Clearly, traders viewed Summers as a threat to the present pace of money printing. And, apparently, now-shoo-in Janet Yellen (seemingly everybody's favorite) is as dovish as they come.
Cause for celebration? Uh, no! Not that I don't like seeing the market higher (my clients love it) mind you, I'd just prefer that it comes after positive earnings announcements, expansion plans (private-sector that is), free trade agreements and other longer-term meaningful phenomena. Not simply because traders, who can't see past the ends of their noses, will take inflated stock prices any way they can get em.
It's going to be a very interesting market the next few weeks. Look for big swings in both directions as we climb that hump I wrote about the other day in This Predicament.
Stay tuned...
This is now a market that cares more about when the Fed is going to "taper" (early contender for word of the year!) QE than the actual health of the economy and earnings. Wall Street is so dependent (dare I say addicted?) to the Fed's magical liquidity machine that traders don't bother to think about what data mean other than through the lens of Fed policy. But rising interest rates may not be a sign of a market apocalypse.
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