Does Anyone Know What's Really Going On on this Valentine's Day?
What's really going on in the markets on this fine Valentine's Day? Back on January 27th, we put forth one view of what might be happening as stocks churned lower. Since then, nothing has changed enough to alter that view, despite the stock market retracing now over half of its fall in January. But we're still left with the unsettled feeling that neither our view or any other that we read holds any credence, never mind primacy in trying to discern what's going on in markets now.
It really does appear that all the views we read - including our own - scattered all over the map as they are, may share one thing in common: Everyone seems as close to clueless as I've ever seen. And it may all be due to one factor: the Fed.
I know, it's all too easy to blame the Fed. In fact, the world seems divided between those who think the Fed plays an important and useful role in our economic lives, those who think the Fed should be junked, and those agnostic types who don't care much about the Fed's existence now or in the future, but who carefully follow it's every word believing that not only ought we not fight the Fed, but we would be wise to make every attempt to parse every word and action of our central bank in order to get a leg up on the future direction of markets.
Whichever of the three views makes the most sense, I won't say at the moment. One thing that does seem to be the case now, though, is that Fed intervention, beginning with the extraordinary programs it created to respond to the 2007-2008 crisis, have so distorted markets that many, if not all, of us simply can't rely on the kinds of evidence and indicators we relied on in the past. And that's not good.
For example, if the Fed's actions have pumped up stocks - something they admittedly did with intention - and pushed down gold - something done with intention, albeit not something they admit to - then we can't observe the price action of stocks and gold and come to any conclusions about "what's really happening" out there. The result of this is that we now find those who claim the economy is picking up steam opposed by those who state - with equal certainty - that we are in a deepening depression.
Do you remember such opposing views claiming our attention in such relatively equal measure? I don't.
One thing the Fed can't distort, though, is the fact that it's Valentine's Day today. And so even as we wonder and dispute what is "really" going on in the markets yet another day, another week, in this year 2014, we can all certainly agree on this being - one hopes - a Happy Valentine's Day.
Can't we?
It really does appear that all the views we read - including our own - scattered all over the map as they are, may share one thing in common: Everyone seems as close to clueless as I've ever seen. And it may all be due to one factor: the Fed.
I know, it's all too easy to blame the Fed. In fact, the world seems divided between those who think the Fed plays an important and useful role in our economic lives, those who think the Fed should be junked, and those agnostic types who don't care much about the Fed's existence now or in the future, but who carefully follow it's every word believing that not only ought we not fight the Fed, but we would be wise to make every attempt to parse every word and action of our central bank in order to get a leg up on the future direction of markets.
Whichever of the three views makes the most sense, I won't say at the moment. One thing that does seem to be the case now, though, is that Fed intervention, beginning with the extraordinary programs it created to respond to the 2007-2008 crisis, have so distorted markets that many, if not all, of us simply can't rely on the kinds of evidence and indicators we relied on in the past. And that's not good.
For example, if the Fed's actions have pumped up stocks - something they admittedly did with intention - and pushed down gold - something done with intention, albeit not something they admit to - then we can't observe the price action of stocks and gold and come to any conclusions about "what's really happening" out there. The result of this is that we now find those who claim the economy is picking up steam opposed by those who state - with equal certainty - that we are in a deepening depression.
Do you remember such opposing views claiming our attention in such relatively equal measure? I don't.
One thing the Fed can't distort, though, is the fact that it's Valentine's Day today. And so even as we wonder and dispute what is "really" going on in the markets yet another day, another week, in this year 2014, we can all certainly agree on this being - one hopes - a Happy Valentine's Day.
Can't we?
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