Wednesday, April 30, 2008

Bunch of Nothing

What happened today? A bunch of nothing. That is the problem. The FED cut by .25% and signaled maybe a pause depending on how you interpret the statement. On the markets side you had a bounce once again stretching that 1400 level but not getting any sort of meaningful breakout. After that test the market quickly retreated but didn't break strongly down being an overall wash for bulls and bears. If your a dollar bull you have to be severly disapointed. The hope across the street was the Fed would come out much more hawkish putting a dagger in the heart of the short the dollar and long commodities trade. That did not happen. As a result the dollar reversed course across the board. The dollar against the Brazilian Real fell almost 3% from its highs earlier in the day!!!! That is a monstrous move for a currency!! The Yen also reversed course. On the commodity front everything also reversed with gold moving up. Corn was up close to new highs before the cut and soybeans had a very nice move upward. All this probably means more of the same and once again that is the problem. Dollar will not meaningfully strengthen in the short term and commodities won't meaninglfully weaken (talking 20% to 30% moves which is what needs to happen if your a U.S consumer fan).

Anyway to sum up another very weak pansy type of move by the FED that doesn't seem to really change anything. The next two days into Friday will be very interesting to see how the markets react.

A couple of side notes. Citigroup closed at $25.27 which was the stock offering price for the secondary offering. Huge bid at that price kept it from breaking that level. In the aftermarkets which really don't mean much it is below that $25.27. Also XLF once again hit $27 just like the S&P tried to break above 1400 and both got beat down.

Bill Gross and his reaction on the Fed cut.
http://www.cnbc.com/id/15840232?video=727258265&play=1

I have alot more little stuff but I need to get on the road to Austin. Should be interesting the next few days.

10 comments:

Anonymous said...

You failed to mention the positive GDP growth. Growth still hasn't fallen off a cliff yet.

Travis said...

The above comment was me.

Market Seer said...

Sorry I saw that as a non event. 1) Government can fudge that number however they want to by a few tenths of a percentage point. .6% is as good as .3% which is as good as .8%. I don't really consider it all that meaningful. 2) It is backward looking versus forward looking. 3) The only reason it was positive at all was because of inventory build which is hard to get excited about. 4) I am not calling for GDP to fall off a cliff. I am calling it for it to be anemic for 18 months or longer which is much different then the consensus and the FED of back to trend line growth by 2009. 5)Cliff diving is subjective. Falling from above 4% to .6% in a year seems like a pretty good jump to me.

You are missing out by not going to the Berkshire meeting. Need to get your priorities straight. lol

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