Lou
05-12-2006, 07:01 PM
HIT AND RUN
By Charles Payne, CEO & Principal Analyst
5/12/2006 9:35:11 AM Eastern Time
All of a sudden it comes to a boil, commodity prices are the culprit (supposedly) and now it's tough sledding. Obviously, there has to come a time when persistently high commodity prices force producers to raise prices, but this isn't news. Nor has it been a problem. Another point is that the drive in commodity prices is in large part to rampant speculation, which the Fed will take under consideration. The Dow was on the cusp of an all-time high but we knew it wouldn't be as easy as it was looking (the index was up five days in a row before getting hammered yesterday). So, now its official, stocks will trade counter the moves in commodity prices. Okay, but this was the same deal last year when crude oil spiked and was supposed to derail the U.S. economy. Eventually, stocks began to trade in tandem with crude oil and commodities in general.
If we look beneath the surface there may be another story in place. I think the Street is disappointed with Bernanke so far, in the fact that he was supposed to be clearer about his intentions and goals. Some folks are saying that his first couple of times at bat he missed because of the ambiguity in the longer, but less concise statements from the Fed after the FOMC gatherings. It took years for Greenspan to improve his communication with the Street, and during the periods when it was totally up in the air as to his intentions the stock market suffered needlessly. We are getting more info from Big Ben but not the message we want to hear, which is entirely different than the message we'd like to hear. Sure, it would be great to have a target tossed out there, but for now I think the Street would be just as happy if the new Fed would just hone in a bit more on what we should be looking for.
The fact that the market was suppose to open higher yesterday and didn't was a huge red flag, and tripped warning sirens everyone that began a domino effect. Anxious money that had recently been creeping into blue chips retreated, and fast money came completely out of techs. Today will be pivotal. I don't think anyone expects the market to be up today, the moral victory comes with a close higher than the opening print.
By Charles Payne, CEO & Principal Analyst
5/12/2006 9:35:11 AM Eastern Time
All of a sudden it comes to a boil, commodity prices are the culprit (supposedly) and now it's tough sledding. Obviously, there has to come a time when persistently high commodity prices force producers to raise prices, but this isn't news. Nor has it been a problem. Another point is that the drive in commodity prices is in large part to rampant speculation, which the Fed will take under consideration. The Dow was on the cusp of an all-time high but we knew it wouldn't be as easy as it was looking (the index was up five days in a row before getting hammered yesterday). So, now its official, stocks will trade counter the moves in commodity prices. Okay, but this was the same deal last year when crude oil spiked and was supposed to derail the U.S. economy. Eventually, stocks began to trade in tandem with crude oil and commodities in general.
If we look beneath the surface there may be another story in place. I think the Street is disappointed with Bernanke so far, in the fact that he was supposed to be clearer about his intentions and goals. Some folks are saying that his first couple of times at bat he missed because of the ambiguity in the longer, but less concise statements from the Fed after the FOMC gatherings. It took years for Greenspan to improve his communication with the Street, and during the periods when it was totally up in the air as to his intentions the stock market suffered needlessly. We are getting more info from Big Ben but not the message we want to hear, which is entirely different than the message we'd like to hear. Sure, it would be great to have a target tossed out there, but for now I think the Street would be just as happy if the new Fed would just hone in a bit more on what we should be looking for.
The fact that the market was suppose to open higher yesterday and didn't was a huge red flag, and tripped warning sirens everyone that began a domino effect. Anxious money that had recently been creeping into blue chips retreated, and fast money came completely out of techs. Today will be pivotal. I don't think anyone expects the market to be up today, the moral victory comes with a close higher than the opening print.