Fed Guidance And Wisdom Breaking Bad

You can’t put a fork in this market just yet.

However, it would be appropriate to conclude the Fed has made a hash in the clarity department. So without much clarity there can only be uncertainty and markets hate that so investors sell.

One issue stands out now to me: there’s a contradiction between the Fed’s view of economic data, suggesting the economic growth is “solid” vs and what some like me see the data as weak. The Fed may be determined to raise interest rates given current “emergency” monetary policies have outstayed their purpose. So if the economy is as strong as they say, they should raise interest rates. But, many opinions say it’s weak with tape indicating weakness.

Consumer Sentiment (93.1 vs prior 90.1) is contradicted by weak Retail Sales (0.1% vs prior 0.0%). Sentiment is often associated with energy prices which remain favorable. PPI fell to -0.4% vs prior -0.5% and Business Inventories rose to 0.3% vs prior 0.1%. Both of these numbers are negative for the economy as deflation continues and the last time inventories to sales ratio were this long the US was in recession.  

Stocks followed-thru on Thursday’s sharp decline with more selling across the board leaving markets at least short-term oversold. It was Friday the 13^th after all.   

Market sectors moving higher included: Volatility (VIX), Gold Stocks (GDX), Biotech (IBB) and Bonds (TLT).

Market sectors moving lower included: Everything else.

The top ETF daily market movers by percentage change in volume whether rising or falling is available daily.

Volume heavy as follow-thru selling from Thursday continues. Breadth per the WSJ was negative. 

No matter, the tape’s doing all the talking.

We are just hearing of the horrific news event playing out in Paris. Our condolences to the victims, their families and all the citizens in Paris. We shall see if these acts of violence will have direct consequences for the markets.