Ben and Alan's Excellent Adventure
Exactly how much influence does the FOMC have today?
She would make a scene for it all to be ignored
And wouldn't you be bored?
-Strange Brew (Cream)
I wonder if John Galt asks "Who is Alan Greenspan?"
More revealing than Greenspan's mea culpa on 60 Minutes Sunday night regarding "Green Speak" obfuscation, which he acknowledged should be called "Fed Speak", was his nod to the notion that he is a social climber. To paraphrase Greenie: we all are looking for approval – it's not that he's guilty of being a social climber, it's that none of us are not guilty of wanting approval.
So, the question is did the Maestro, in an effort to win approval from the Boyz in the Band, leave rates at too low a note for too long?
In all fairness, we can all remember a time after the technology bubble burst, when we anticipated that real estate would be a beneficiary from the ills of equities. However, rates staying so low for so long created a powerful mix. After the Internet mania the inclination for folks to stash money in anything that didn't smack of virtual reality loomed large.
It wasn't just the collapse to historically low rates and the flight from stocks that promulgated a strange brew on Wall Street – let's call a spade a spade. The lending practices and enticements weren't as strange as they were just plain fraudulent.
And, although Greenie isn't copping to it, he was embracing the new-fangled arms on all fours. He was hopping all over the laissez-faire financial machinery as much as the recalcitrant regulators, pumping out these debt instruments of mass destruction. One might say Mr. Greenspan is up to his neck in arms.
The run on the bank in England may turn into a run on the Bank of England, and that may just be the first shot over the bow.
One brother in arms that probably doesn't appreciate Alan's marketing more green on his memoirs on the eve of one of the most important or hyped Fed meetings in years may be Ben Shalom Bernanke. I'm wondering, given his moniker, does Ben hum, "I say hello, you say good-bye"? Talk about stealing the limelight. Hey, Green is as Green does.
The market will voice its verdict today. Brother, can you spare a quarter point? Was Monday's down and dirty open just a program to pull the rubber band back in front of a long side shot after the FOMC today? Hey, he's not heavy, he's my derivative.
If the Fed fires a 50 basis point cut, will the market advance, or freeze in the headlights, wondering what the Fed knows that we don't? If the Fed cuts 50 basis points does it mean that it has been tagging the toes of more credit bodies washing ashore that we aren't aware of yet?
The larger question, of course, is exactly what will be solved regardless of what the Fed does? Is it just psychological pabulum for Goldilocks? The even larger question is will a Godzilla of Deflation arrive before The T-Rex of The Jaws of Inflation?
Exactly how much influence does the FOMC have today? My answer to a trading buddy who asked this question on Monday was, "Look to Nero and his crew."
"Did they really have fiddles in Rome?" Jethro Clampett in the Coliseum; Ben in a Box? Hey, Rome wasn't burnt in a day.
Conclusion: Technically, if the S&P remains waterlogged below 1480 after the Fed statement methinks something is wrong in Denmark. If the S&P breaks 1470 after the Fed statement, the test towards 1400 and lower should be on.
Bottom line, I expect an FOMC Cha Cha today, more worthy of Keith Richards than Arthur Murray.
So I'm wondering, "Which one of the Glimmer Twins will end up as the scapegoat?"
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