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Which way do we go?  Which way do we go?

No BS Weekly Update  4/9/2012
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Dear  ,

 

Which way do we go?  Which way do we go?

 

That seems to be the question for this market doesn't it?  Do we see the rally continue or is it time for a reversal?   
DownDaily 9-22-2011
(Source: YahooFinance)

What is amazing to me is how fast the sentiment keeps changing.  It was just a week or two ago we were seeing confident predictions of the rally continuing throughout the summer.  But after suffering through the worst week of 2012 that sentiment has changed quickly.  Take a look at these recent headlines. 

 

Wall Street Wraps Up Its Worst Week of 2012

 

Analysts: Earnings Growth Will Plummet in First Quarter

 

Vitner: Jobs Report A Reality Check for Economy

 

Kass: Liquidity Rally Over, Investors Face Reality

 

Experts: Don't Expect Fed to Launch More Easing on Dismal Jobs Numbers

 

Central Bankers Jawbone as Policy Tools Run Short

(Please click on any of the headlines to read the stories)

 

What I'd like to focus on today is the last three articles.  Do you see a common theme?  If not the theme is Quantitative Easing.  The Fed's bailing out of the economy.  The question is to what extent has it been responsible for the recovery and can the recovery continue without it?  And if not, can we expect Quantitative Easing to continue? 


Let's start with the first question.  As they say a picture is worth a thousand words. 
DownDaily 9-22-2011

 

Look at what happened each time the Fed ended a QE policy.  Declines in the market until the next QE policy is announced and implemented.  Coincidence?  And if you will recall, in both of the previous cases the Fed was very forceful in their statements that there would be no need for another round of stimulus.  That would be the "jawboning" referred to in the 6th headline above.  You can see what an effective tool that was. 

 

As an aside I'd like you to consider this question.  Do you think it is appropriate for the Fed to use "jawboning" as a tool to begin with?  Is it appropriate for the Fed to cheerlead the economy and perhaps give the citizens an incorrect or misleading impression of the state of the economy?  Is that appropriate or should we expect just cold hard facts from the Fed so that we can have a factual basis from which to form our own opinions? 

 

Now as to the final question, can it continue?  That really is the question isn't it?  Can the U.S. continue to keep this market propped up indefinitely?  If not, does it look like it can survive on its own?  Your answer to those two questions should go a long way in helping you determine your current outlook and investment strategy.

   

As we continue to say folks, Protect Your Wealth.  If you'd like help doing that, please give us a call. 

 

Sincerely,
Phil's signature in blue

 

 

 

 

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Week In Review
Egan-Jones Cuts US Rating Again, Citing Growing Debt(Bloomberg)

RF: On our way to joining Greece, a little at a time.

Wall Street Wraps Up Its Worst Week of 2012(AP)

RF: Bump in the road or trend change? Give us a call and we'll share our view with you!

IMF chief calls on US for more cash(The Times of India)

RF: But wait, I thought the problems in Europe had already been solved? Why do they need even more money? (Said tongue in cheek)

Laughter

DownDaily 9-22-2011 

DownDaily 9-22-2011 
DownDaily 9-22-2011
(www.chartoftheday.com)

Growth 

Richard St. John: Secrets of success in 8 words, 3 minutes
Richard St. John: Secrets of success in 8 words, 3 1/2 minutes

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Good Eats
This is one of my favorite vegetable recipes.  Considering that I'm not a huge fan of veggies to begin with that is a big recommendation.  The one correction I would make to this recipe is in the ingredients.  It lists seasoned salt as optional.  It's not optional.  The seasoned salt and the almonds together are what really make this dish in my mind!

(Click to print)

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Phil Reames

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