Dazed and Confused
Market has no idea what to do today.
Should the market rally because the economy might do better? Should the market tank because interest rates might not be cut again?
If anything, I think this recent rate cut added more uncertainty to the market. That’s because the certainty of a rate cut is now gone. And the certainty of the economy doing better was never around to begin with. And now that earnings season is coming to a close, the only thing left for the market to pay attention to is economic news.
That and world news.
With that said, I heard that first quarter GDP came in better than expected on the back of inventory building. So the thought goes that next quarter inventories will be fine, which means no more orders for more inventory.
Needless to say, economists expect a big contraction, even with the tax rebates. If we get a big enough contraction, then the bear market would be in full swing.
Better yet, if the economy doesnt start improving by summer, the market is going to be lost. Right now traders are trying to predict a recovery in the second half of the year. Yes, a recovery.
This ain’t 2001.
With that said, here’s a song that I feel the market is feeling right now.
And Jonathan – you should be happy because its Led Zeppelin!
EXCELLENT! A little Led Zeppelin goes a long way when I watch the Fed kill our economy right in front of my eyes…
I think you are spot on regarding the market conditions now. The major thing that was keeping the market in check was the idea the Fed probably would cut the rate a quarter point (which they did). Now that the Fed is giving the indication they won’t cut rates again, investors don’t have the interest rate price pusher to trade on.
Also, the market’s performance had been based on perception of performance relative to expectations, rather than actual performance because traders were fearing major catastrophe and instead got, well less catastrophe.
Now that actual performance is all you will have, I expect some bloated stocks to pop like a needle through a balloon.
Although I am not an expert by any means, I am smart enough to know that I companies posting billions in losses are probably not supposed to go up in value after the news, regardless of how they are prices prior to it.