Welcome to the Party, Pal
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You’ve likely heard of being “bushwhacked.” Well, yesterday the market got Fed-whacked. Notes from the Federal Reserve’s April 29-30 meeting were released and, boy, did they make for some unpleasant reading.
The major indexes took their hardest hit in months as Wall Street digested the news.
As it turns out, the shiny happy Fed wasn’t nearly as shiny and happy behind closed doors as investors might have hoped. Instead, there was a palpable sense of gloom.
The battle with economic slowdown will be a long, tough slog, the notes implied… as will be the battle against inflation. The Fed went so far as to admit conditions could still be bad in 2010.
It’s a bit hard to swallow for those of us who’ve been paying attention but, believe it or not, slowdown worries and inflation woes are still big news to some folks out there.
There is a hefty cross-section of investors (and Wall Street pros, too, for that matter) who are just “waking up” to the reality that we at Taipan have been shouting about from the rooftops for so long.
What? You mean the Fed is fretting over a toxic cocktail of slowing growth and rising inflation pressures? Ye gads, why does that sound so familiar? Could it be… could it possibly be… what was that “S” word again that those doom and gloomers like to yap about? “Stagflation” or something like that? Stop the presses!
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A Word From John McClane
The out-of-the-blue shock on the heels of the Fed minutes reminds me of a scene from Die Hard, one of my favorite old-school action movies.
Bruce Willis (in the role of detective John McClane) is trapped in a skyscraper with a bunch of ruthless German terrorists, and he is desperate to bring in outside help. He frantically gets hold of 911 on the roof, but the skeptical operator thinks it’s a prank call. Witticisms are exchanged; hilarity ensues. Finally the annoyed operator gives in and says she’ll “see if a black and white can do a drive-by,” just to get Willis out of her hair.
A cop cruiser later rolls up to Nakitomi Plaza, circles the pavilion aimlessly, and gets ready to leave with a “nothing to report.” But Willis is having none of that. He responds by heaving a defunct terrorist through a skyscraper window, right down onto the cruiser… and then fills the car’s hood with machine-gun fire from 20 stories up.
After seeing his windshield smashed and his car riddled with bullets, the half-asleep cop behind the wheel goes from bored day-dreaming to burning rubber in reverse gear, yelling at the top of his lungs for backup. Willis cackles at his success in getting someone’s attention. “Welcome to the party, pal!”
So here’s a shout-out to those who thought the U.S. could just tip-toe past the consequences of its actions… who assumed that consumers would soon be right as rain again with no worries over all that debt piling up… who shrugged off inflation as a “minor problem” and assumed the broken banks could just be patched up like bike tires… to you we say, “Welcome to the party, pal!”
40 Acres and a Mule
The party is revving up again now — for the bears. It wasn’t just that the market saw its biggest downward jolt in months yesterday. The S&P 500 also managed to fail right at its 200-day moving average (light green line)… a slightly ominous sign (and a plenty loud new shorting signal).
Oh, and by the way — financial stocks, those toxic turnaround candidates we love to hate, are again leading the market downward. On May 9, Taipan Daily said of XLF and the financials in general: “This is a nice short setup. There will be some bearish trigger-pulling here soon.”
Those shorts are nicely profitable now, and set to get more so.
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Tags: bull market, commodities, Crude Oil, Economic Slowdown, fed, IEA, inflation, Inflation Pressures, Oil Profits, stagflation, Wall StreetAbout the Author
Justice Litle, Executive Editor for the Taipan Publishing Group and of the Free E-letter, Taipan Daily, has a unique background that has served him well in the markets. Originally pursuing a PhD and a life in academia, his career path changed forever after discovering The Investment Biker, Jim Rogers chronicle of macro investing by way of motorcycle.
Taipan Daily is your free resource for late-breaking investment opportunities to help you beat Wall Street to the profits. Filled with investment analysis and insight from every sector. Taipan Daily delivers just the right blend of safe opportunities with the fast-moving plays, so you have an insider's edge over Wall Street and other investors.