Friday, January 10, 2014

Fed Boxed Into A Corner?

It is too early to tell yet, but today's unemployment report stinks. That leads to several questions:

1 - Is the report an outlier? We all know that the way our government reports its numbers stinks and is constantly adjusted. We will have to wait to see the adjustments to the numbers and then more reports.

2 - According to one Congressman, the labor force participation rate is worse than when the FED started the QE program. So the unemployment rate and numbers are a bogus measure of jobs.

3 - Is the economy therefore weakening?

4 - Is the "bad news is good news" scenario over?  If so, the Fed may be boxed into a corner as their monetary policy may become one of "pushing on a string."  Does the Fed have more tools up it's sleave? If not this could spell big time trouble.

5 - What is the Bond Market reaction to this? So far rates are down. how will this play out over time?

6 - How do Fed Chairmen leave at the exact right moment sticking their successors holding the bag? Greenspan stuck his mess on Bernanke. Is the economy petering out so that Bernanke is sticking his mess on Yellin? We shall have to wait and see. The market so far appears to be unsure but fading a bit.

In other news I sold GALT @$16.00 pre market and will probably sell MONIF on the gap up since it is trading up 6% in London. Whoosh anyone? I intend to trade this stock for a long time, but it is extended now and my fear of the market tips the balance for me.

BIG Capital Advisors and Seaview Partners are not responsible for your investment decisions. We believe very strongly in our opinions, but you must perform your own due diligence in making your investment decisions.
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