Will Friday Start the Biggest Sell the News Event Ever?
I'm starting to believe that Bernake's statements later this week could trigger the biggest sell the news event in history. Stocks are soaring today on the back of more dismal economic data...we're now batting a thousand on Fed factory activity surveys showing contraction. Several weeks ago many economists were putting odds of a new recession later this year or early next year at 1-in-2 or 1-in-3...it now looks like the odds that we're already in a recession is closer to 1-in-1. Housing continues to look worse than most had expected. We've seen many more weak earnings reports and guidance than in the past several quarters as well. Despite all this stocks are up on nothing but hope...headlines read "Wall Street Rallies on Fed Speculation".
I just don't see Bernanke announcing QE3, or anything like it, at this point...even with all the weak data we've seen recently. Next week could look a lot like the first week of August...wouldn't be suprised to see the Dow below 10K within a couple weeks.