Fed Can Relax About Who Will Get the Blame

Here’s the Fed at its most obtuse, as reported Wednesday in The Wall Street Journal: “Fed officials saw their move to cut rates last month as a recalibration rather than the start of a more aggressive easing cycle and were reluctant at their latest policy meeting to say how future moves would unfold.” Are these guys kidding, or what? This press-release bilge is right out of academia’s  May Day Parade handbook, and it has Wall Street’s “Kremlinologists” struggling desperately to decode “recalibration” and its implications for the U.S. economy. The word is intended to suggest that the quacks who determine monetary policy do so with scientific precision. In fact, they make it up as they go along and are now struggling to avoid blame when the stock market takes its inevitable fall. You have nothing to worry about guys. Trump’s aggressive stance on tariffs will be the story for generations to come, just as Smoot-Hawley is still blamed for tripping the country into the Great Depression.

Juicy Short Sale Ahead

It was odd for the Dow Industrials to tack on 240 points in spite of the news, and perhaps even crazy to extend the rally moderately in off-hours trading Wednesday evening. The flurry of short-covering responsible for the rally is being attributed to strong earnings reports from Target and Lowe’s. That was last quarter, though, and share buyers seem not to have considered what might happen next. Many companies, even those that have reported respectable numbers recently, are scaling back their forecasts. And just as profits are unlikely to expand much in Q3, the stock market is unlikely to hit new record highs, especially with corporate buybacks tapering off. Those highs lie about 5% above current levels for the Dow, and it’s not rocket science to discern that the blue chip average will be a juicy short sale somewhere between here and the July top. Join us at Rick’s Picks with a free trial subcription as we attempt to find that top with tea leaves, toad entrails and our own brew of technical analysis. [Note: Rick will be on holiday from August 23 to September 4. During that time, there will be no daily commentaries, although he will continue with timely updates as warranted at Rick’s Picks.]