September 25, 2011
Weekly Market Outlook
By Keith Schneider
Our Washington insider caught this picture in a bar not too far from the Fed building on Friday after the markets closed. As you can see, a seemingly inebriated Bernanke was at wits ended allegedly mumbling, I can't do anything right. First they call me Helicopter Ben and now when I park the chopper the markets don't like that either. I should have printed not twisted. From my perspective not printing more money for the banks to hoard is a good thing. Trying to actually help out the consumer was a good move. After all it's the US consumer that drives much of the worldwide economy; why not give them the opportunity to do it again?
So much other news came out this week from the Greek default, a global economic slowdown, and the downgrade of US banks that it makes the Fed move seem like pissing into the wind. Last week we talked about "twist" and thought the market might like some non-inflationary ideas, but it was overshadowed by the plethora of bad news. One piece of good news left out is that the deleveraging of the US Consumer is happening much faster than most have expected and this might actually help. Back in 2007, US household debt consumed 14% of income. It's now down to 11% and could be even lower with most current data. This means that debt levels as a % of income is at 1982 numbers. The Gold run is over for now and most pundits are seeing this week's collapse in the metals as part of the economic slowdown and the need for cash during this week's meltdown. We think that "twist" was a major component in the selloff as well. Does poor Ben have it right? From a trading perspective, it's nice when your fundamental picture lines up with the technical, but technical always trump. By the time you get the memo the fundamentals have shifted, you can end up in the poorhouse. Most portfolio managers are working overtime this weekend redoing valuation models and licking their wounds. However, this was a banner week for quick active traders. Let's take a look at what the charts are telling us now after this week's meltdown.
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