i like the looks of this.. everybody seems pretty sure that the wrost is over and its melt-up time... one clown is even talking about an expiration melt-up (ie- he's already long)
the one thing that always cracks me up is these f*cking morons who talk about the fed and bonds as if the fear of the Fed raising rates made bonds selloff.. LOL!! Bonds price in future inflation among other things, the best way to control it is for the Fed to remain vigilant and tighten... in fact, best case for bonds would be for the fed to tighten down by two full points and cause a f*cking depression. L-T bonds and the dollar would soar (well, maybe not the dollar -g-) and yields would plummet... obviously THAT isn't going to happen.
the bond mkt instructs the fed, not the other way around... i get so sick of seeing these idiots spouting off...
Doomsday Scenarios of Yesteryear Finding Few Backers
By Justin Lahart
Senior Writer
9/10/99 6:41 PM ET
It's been remarkable how the stock market has moved along the same contours this year as it did in 1997 and 1998.
There was the big run-up at the beginning of the year, the period of consolidation through spring, the push to new highs, the peak in midsummer. And then there was the wall of worry, a few big declines and a snapback. In 1997 and 1998, that rebound was just an idiot bounce (for a while, at least) -- anyone who bought it got bled dry when the real selling came in October.
Everything's the same until it's different.
Friday's tame August Producer Price Index, along with the benign employment report from the week before, have significantly lowered the odds of the Federal Open Market Committee raising rates again when it meets Oct. 5. Or, for that matter, for the rest of the year.
"Yes, the economy is still strong," said Mike Cloherty, senior economist at Credit Suisse First Boston. "But we're really not seeing the kind of final-goods inflation that would force the Fed's hand. There's really no compelling reason for the Fed to have to raise rates."
If there was a reason for stocks to fall, it was that the Fed was going to continue along its tightening course. If the Fed is really out of the way, the market may just be able to sail through the straits of October unscathed.
"If the Fed is done, then markets need to reprice," said Jeff Applegate, chief investment strategist at Lehman Brothers. "Interest rates will go down, P/Es will go up again and the market focuses on what by any measurement are darn good earnings." Analysts' estimates call for S&P 500 companies' third-quarter earnings to gain 21% on last year, according to First Call/Thomson Financial.
Even some who worry that the Fed may not be quite done think stocks are ready to move up. Peter Canelo, U.S. investment strategist at Morgan Stanley Dean Witter, thinks there may still be half a chance that the Fed will make a move in October. He warns that "there could still be another hike out there, [so] there could be more selling." But given the recent economic data, that hike would almost certainly be the last of the series. As a result, he doesn't think it would deal much damage. With that in mind, it appears to Canelo that the S&P is on its way to finally breaking out of the range that's held it for the last five months.
There are a couple of big economic reports in the coming week, but neither are expected to rile the market. August retail sales come out Tuesday. The headline number should be strong on the back of good sales in autos, but excluding those it should be a benign report. The key inflation report, the August Consumer Price Index, comes out on Wednesday. The uptick in oil prices should make the overall number in that one strong. But as with the PPI, the core, which excludes the food and energy sectors, is expected to come in like a lamb.
People will be paying a little more attention to the second-quarter current account deficit, which comes out on Tuesday. When bears talk about what's going to lay the market low these days, they talk about how the massive deficit is going to force heavy selling in the dollar, which in turn will bring on inflation, forcing the Fed to tighten and punishing U.S. assets.
"People have been talking a little more about current account," said Cloherty. "Historically, you get very little market reaction to it. It will get some response this time. It's definitely in the back of people's minds."
On the positive side of things, Friday is triple-witching, the expiration of stock options, stock index options and stock index futures. Recall all that stuff about how this year has looked just like last year. A lot of people had been placing bets that way, selling calls in August. With markets improving, the calls may be slipping into the money. Whoever sold them will have to cover. Covering sends the market higher still -- bringing more calls into the money. It's still unclear where the bias on the witch lies, but stock derivatives and futures types have been talking about the possibility of a strong move to the upside.
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