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Pastimes : The Philosophical Porch
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From: Rarebird8/23/2006 10:00:00 AM
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Market Fragments:

Fed President Moscow delivered some hawkish comments on interest rates yesterday: he reminded investors that the central bank might not be finished raising rates. This introduced more uncertainty in the Market and the Market tends to hate uncertainty.

The Market's initial reaction was to move lower; but then it recovered to close slightly positive on the session.

Fed president Moscow said his assessment is "that the risk of inflation remaining too high is greater than the risk of growth being too low. Thus some additional firming of policy may yet be necessary to bring inflation back into the comfort zone within a reasonable period of time."

There appears to be a lot of denial in the Market here. While a Fed President has explicitly stated that another rate increase may be needed, all I hear from Analysts and Strategists on Bloomberg and CNBC is that the next Fed move from Chairman Bernanke will be to lower rates this coming fall or winter.

Such denial ultimately leads to disappointment and massive selling. This is partly why I took a short position in the S@P 500 near the close yesterday.

Moreover, this market is very overbought on a short term basis, fundamentally way overvalued and the S@P 500 is sporting a bearish wedge on its chart.

The economy is rapidly slowling to the point that it may already be in a recession and inflation pressures are continuing to build.

Whoever said Life is Rational?

It takes strength, courage and vision to succeed.
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