“Minutes of the Federal Reserve’s January meeting released Wednesday reveal that many Fed officials are worried about the costs and risks arising from the $85 billion–per–month asset-purchase program. And they all seem to have their own ideas on how to proceed…Several Fed officials said the central bank should be prepared to vary the pace of the asset-purchase plan depending on the outlook or how the program was working. One wanted to vary it on a meeting-by-meeting basis…‘The minutes show a committee that is far less unified than at any other time in the past few years,’ said Millan Mulraine, senior economist at TD Securities.” Full story at…
http://www.marketwatch.com/story/fed-plans-debate-on-bond-buys-minutes-show-2013-02-20
The Markets hate surprises and the previous story looks
like a surprise may be in the future.
SEQUESTRATION
One of the really amazing things about the incompetence of
Congress, and the President too, is that this sequestration (that Congress
passed and Obama signed into law) applies to “Programs, Projects and Activities
within Accounts”. This means that the
reductions are directed by Congress at each piece of the budget – not at large
programs. For example if you directed
DOD to spend 10% less money, I think the impacts would be small since unneeded
programs could be cut or delayed; but rather than direct agencies to prioritize
and make cuts, the sequester requires across the board cuts to all items down
to an activity level. So waste isn’t
eliminated, it is just cut a little like the rest of the budget.
What’s really ironic is that Congress doesn’t even know
itself what the law says, as exemplified by the next Article:
LAWMAKERS TRY TO PROTECT HOME TURF
“…(Senator Roger) Wicker warned that cuts to the Mississippi River and
Tributaries Project, which manages inland waterways and flood risks, would harm
the local economy and pose a safety threat…He pressed Jo-Ellen Darcy, assistant
secretary of the Army for Civil Works, about whether she could send a request
“upstream in the bureaucracy” for more flexibility in carrying out cuts to the
Army Corps…Darcy’s response: It would be nice, but the law is the law.” Full story at…
http://www.politico.com/story/2013/02/lawmakers-protect-home-turf-from sequester-87794_Page2.html
In other words, the clowns in Washington set up the law in an incompetent
fashion; the Assistant Secretary of the Army can’t change it – only the
Congress and President can.
Even the Senate Minority leader doesn’t understand this. He made
comments that Obama should prioritize the cuts to avoid layoffs at TSA that
will cause airport delays. The President can’t – even
he doesn’t have the authority under the law. He can only exempt the military.
MARKET RECAP
Wednesday, the
S&P 500 fell slowly throughout the day (down about 0.5% at mid-day), but
rapidly pulled back after the Fed minutes were released at 2PM to finish down
1.2% to 1,512 (rounded).
VIX was up 19%,
to 14.68 as someone woke up the Options boys.
NTSM
Wednesday, the NTSM analysis switched to HOLD at the
close as all indicators significantly declined. None of the indicators moved to sell though.
NTSM sentiment was 62%-Bulls as of Tuesday’s close –
close to the 67% negative level. That’s
just one indicator…I think it would still take a couple more days for the
entire NTSM system to issue a sell signal, if indeed this hiccup turns into
more sustained selling. I don’t expect
that though. It is likely that the
buy-the-dip crowd will move in and we’ll make another new high before the party
ends. We’ll have to wait and see on that
guess, though.
The Fed news may really rattle the markets. The Pros sold in the last hour today, but not
at a rate that was alarming.
MY INVESTED POSITION
Based on a BUY
signal 7 of 9-days, and more importantly, consecutive closes above the prior
high of 1466, I moved into the stock market at 1471 on the S&P 500 on 14
January. I am currently invested in a
range of near 50% invested in stocks.
