Market Bides Time Ahead Of More Fed Twaddle

March 19, 2019

DaBoyz have been artfully rotating money between a handful of high-profile stocks in order to keep this distributive rally going for as long as possible. On Monday, although the broad averages seemed leaden all day, the Dow still eked out a 65-point gain while AMZN, AAPL and MSFT rose, respectively, 1.75%, 1.08% and 1.48%. This was despite the fact that shares of Boeing, the 800-pound gorilla of late (click on inset to see how Kong has been soothed), was off $7, or 1.65%, Tesla was getting sacked for 2.4%, and Facebook was down 2.24%.

It feels as though for each marquee stock that is falling on a given day, there’s a corresponding biggie that is rising. This suggests that the Masters of the Universe have been systematically going about their business — i.e., unloading as much stock as they can on widows and pensioners while conditions are favorable  — with relatively little firepower at their disposal. As we know, the only buyers voracious enough to generate headline rallies and push stocks above previous peaks are short-covering bears. Unfortunately for Wall Street, there has been insufficient “good” news to goad them into the kind of mini-buying-panics that worked so well in January/February.

Very Stale News

The smart money undoubtedly is waiting for “news” from this week’s FOMC meeting to help trigger a short squeeze worthy of the name. However, the requisite but increasingly moronic-sounding story — that the Fed sees “no strong reason” to tighten “right away” — has been rehashed so many times over the last couple of months that it has become as stale as a sitcom laugh track. Each time this supposed news is rehashed, the wording is adjusted slightly so that it sounds as though the Fed has budged another millimeter or two in the direction of easing (or, perhaps, of ‘not-tightening’). This diminuendo of twaddle has left the door open to news that the Fed, a step behind its Brussels counterpart, is ready to start easing again. That’s guaranteed to lift the markets and could do so for a period of weeks, even as the “easing” story is modified, restaged and diddled in countless ways. Whether the stock market is at new record highs when the dog-and-pony show ends is unpredictable at the moment, but we do not regard a new round of easy credit at this stage of the economic cycle as being even remotely sufficient to resurrect the bull market. 

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