With yesterday’s ISM manufacturing reflecting the 3rd month in a row of slight contraction and FDX’s negative preannouncement blamed on “weakness in the global economy” constraining revenue growth at its FedEx Express unit at the same time the S&P 500 is above 1400, near its highest level since May ’08, faith clearly remains high in the Fed and the ECB. With the ECB tomorrow laying out its bond buying plan with implementation dependent on a country request for help and the Fed likely embarking on more action next week, the stock market is approaching the moment when the central bank news is out and market participants must determine if it’s something that hasn’t been discounted yet. As I believe what will come over the next week will be no different than expectations, stocks are at growing risk of a sell on the news as attention shifts back to economic and earnings fundamentals and away from central bank money printing that can’t reverse the economic realities, they can only temporarily cover them up.

Category: MacroNotes

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4 Responses to “Are we approaching the classic sell on the news moment?”

  1. poly says:

    I believe you’re right here, QE3 has been discussed for over a year and has fueled (Bernanke Put) the rally since last (2011) summer. Unless we’re talking about a QE3 + QE4 at the same time, essentially the open ended QE version, I don’t see how any announcement is not already priced.

  2. Disinfectant says:

    Have been thinking this for the past couple weeks. I’m not waiting for the news; sell now while you can.

  3. Greg0658 says:

    did anyone else hear the SLF Bullard comment about negative interest rates on Fed holdings – that imo would be a wrenched ankle to wait & see shrivel & buy

  4. carleric says:

    Does anyone really think that Bernanke knows what he is doing? Yes, He can juice the market but impact the economy? I don’t think so. Thinking its true won’t make it true Benny.