We’re gearing up for a marvelous lesson in public relations later this month when the Fed holds its last meeting under the gavel of outgoing Ben Bernanke. That will happen January 29 & 30th. And, although the press won’t be in the room, a ceremonial “handing over the gavel” may be anticipated.
According to some, a rather obscure indicator of markets will flip over right in that period: The Bradley Siderograph. You can find a good discussion of it here, but the main thing to note (if you’re not actively trading markets) is that the Bradley turn date happens at the same time the Fed meeting pops up. This arrival of a Fed meeting and a turn date is – as the Chinese might say – an auspicious occasion.
Which is why it would be a dandy time for one of two things to happen: Either Janet Yellen will play ball with Wall St. or she will act tough. She’s stepping into a pressure-cooker where there is no right answer.
The analogy my consigliere uses goes something like this: The Fed thinks it can “build a bridge” across the long wave economic abyss that we’re almost smack over. In order to do this, they have built a series of bubbles to help them along their way. Print money fast enough to keep things going, but not so fast as to hand the easy win to us gold bugs through rampant inflation. You know, just keep depression/deflation out of sight.
One of these is seen in how the market went into a real estate bubble orchestrated by Alan Greenspan. That bought us part way over the chasm. Then, with the collapse of the market in 2008 into 2009, there was a need for a new stimulus to “build the next part of the bridge” and we have been going through that exercise with Ben Bernanke’s quantitative easings.
We note, in passing, that the Greenspan reign at the Fed lasted to 2006. With this in mind, we wonder if the “passing over” to Bernanke in this period, marked the end of the housing bubble? In many markets, 2006 (starts) were the last big batch. The top was in by 2007/2008 and then we know what happened next.
Analytics could be used to count days from the Greenspan departure to the bottom of the secular market in 2009. We know, for example, that the last Fed meeting for Greenspan was 1/31/2006. And that the Dow, on a weekly closing basis was setting its low on 3/2/2009.
That’s 1,126 days.
We can then plug in the date of Bernanke’s last Fed meeting and wonder what will happen 1,126 days later?
Will a new market low be appearing the week around March 1, 2017? Fed bosses don’t change at the bottom. But near tops? Yes, that would be more in line with expectations.
Markets on Ice
Still, for this morning it is “Turnaround Tuesday” and after slipping 45-points by the Dow yesterday, the market seems set this morning to come back to life with the futures pointing to a modest gain of 60-70 points.
The reason to be a little cautious in here is simple. I mean besides the Bradley/Fed date coming. The price of oil is still under $95, the December auto and truck sales disappointed, and the recovery needs something a little stronger than just newly minted paper to become sustainable. Another indicator – the Baltic Dry Index – has failed to move decisively higher than the 2,000 levels, so it will be worth keeping an eye on once we get to the turn date.
And that leaves us with only one major data point going into this morning’s open: The new Balance of Trade number just out from Census:
GOODS AND SERVICES
Exports increased to $194.9 billion in November from $193.1 billion in October (revised). Goods were $137.1 billion in November, up from $135.6 billion in October. Services were $57.8 billion in November, up from $57.5 billion in October.
Imports decreased to $229.1 billion in November from $232.5 billion in October (revised). Goods were $191.0 billion in November, down from $194.4 billion in October. Services were $38.1 billion in November, up from $38.0 billion in October.
For goods, the deficit was $53.9 billion in November, down from $58.8 billion in October (revised). For services, the surplus was $19.7 billion in November, up from $19.5 billion in October (revised).
Like it, or don’t, the market could rally through the end of the month. From there? You pays you’re money and you takes your chances.
More after this…
Yes! It’s Still Winter!
Yes, the map says it and so does this narrative from the National Weather Service:
Bitterly cold air over the eastern two thirds of the country will slowly moderate through Wednesday. In addition, as the cold air passes over the Great Lakes, the temperature difference between the water and air will aid in producing lake effect snow downwind from the Great Lakes through Wednesday evening. Meanwhile, upper-level energy over the Pacific Northwest will move southeastward to the Central Plains/Middle Mississippi Valley by Wednesday. Weak onshore flow will produce rain and higher elevation snow over parts of the Pacific Northwest that will increase to light to moderate by Wednesday evening. Additionally, the energy will trigger light snow over parts of the Northern/Central Rockies on Tuesday and Wednesday. Return flow around high pressure over the Central/Eastern Gulf Coast will stream moisture from the Gulf of Mexico over the Western Gulf Coast into the Middle Mississippi Valley, producing rain over Western Gulf Coast into parts of the Lower Mississippi Valley Wednesday morning into evening. Snow will also develop over parts of the Middle Mississippi Valley by Wednesday evening. Furthermore, an area of rain/freezing rain will develop over Eastern Oklahoma and Northwestern Arkansas on Wednesday evening. Elsewhere, Easterly flow off the Atlantic will produce light rain over the Southern tip of Florida from Tuesday evening into Wednesday evening.
Other than renaming a few states – Snowklahoma, or Arkansnow, or possibly Snowsouri – this is another cold one. Especially in places from Snowhio eastward. Pensnowvania should see some today, too.
Rodman Kerry’s On
here all this time you thought the chief officer of ‘Merican foreign policy was the SecState. But no, it may be Dennis Rodman who is off to the birthday party in North Korea by Kid Uncle-killer. Not saying he didn’t have reason, but we’ve grown accustomed to due process rather than just throwing someone to the dogs, in a manner of speaking (and then some).
Other than a 5-something down toward Chile, we can’t get too excited about the Earthquake picture. Could it be that in the midst of a drop in the sun’s output that we will not have the same rising frequency of quakes as the earth isn’t expanding because of heat so much?
Meantime, about the only thing quakesayers can say now is “Just wait till this CME hits – if there is one associated with it:
An impulsive M7.2 flare erupted on January 7 at 10:13 UTC. The flare is also observed by SDO/AIA. The source region is NOAA AR 1944. During the past half day, there was also quite some activity in NOAA AR 1942, 1944 and 1946.
Further analysis on any related CMEs will be carried as soon as more data are available.
For now, our concerns are on the band from the St. Lawrence seaway down toward New Madrid because that’s where UFO reports/earthquake lights have been seen.
Main thing to be aware of? National Geographic summarizes new findings in “Bizarre Earthquake lights finally explained” over here.
Gun Rights Upheld
No, Chicago’s tough gun (store) laws are not constitutional, says a court. But, of course, the city run by former Obama chief of staffer Rahm Emmanuel, will appeal.
Sort of reminds me of the old days when porn shops were being pushed around by cities trying the “zone defense” with zoning laws…eventually the lawyers found a way, which is what they line up to take money to do…
But Seriously Strange?
You need to read, says my buddy Howard, the story in the Dunkirk, NY Observer about the “Church of the flying spaghetti monster.”
No, seriously….well, sort of… you’ll warm to the idea…eventually. Sometime in July?