Confusion and delay ultimately have a price to pay. That’s the case whether it is the perpetuating of a ‘bad news is good news’ monetary policy of low rates for an infinite period of time, or whether it’s a lack of cohesive strategies to engage terrorists in Europe, ‘as if’ it’s still early enough to just do so in the Middle East or for that matter delay in maintenance of Washington’s Metro, which may partially be shut-down for several months, because of lack of will to do repairs sooner.
That seems to be the decision-making hallmark these days; procrastination. The stock market doesn’t actually ‘like’ this; it just appears that way as rates are low; risk is high, but money managers scramble to ‘presumed’ safety, never realizing that (unless properly hedged), there’s essentially no safety-net to catch a fall.
Now that doesn’t mean a big capitulation is imminent, nor that it was going to be in the past couple weeks. To the contrary, we regularly opined that this would be an irresolute pattern, sort of horsing-around until we got through the FOMC, the Quarterly Expiration, the Yellen address to the NY Economic Club, and Dudley’s speech (NY Fed President) on Thursday; as well as the very end of the Quarter.
But you never know what happens when horsing around (not to suggest things as bad as a London newspaper ‘says’ occurred in Saudi Arabia, where officials are said to have executed a stallion for fondling a similar horse). Eerily in equity markets, stocks have been romping around, volatility has been quelled, and one would be forgiven, not executed, for misidentifying day-to-day market gender as being any flavor of bull or bear. Classify it as neutral with an upward bent maybe as the futures worked higher, without real gusto; and clearly responding to Fed Chairperson Yellen’s repudiation (or at least equivocation) of her colleagues sort of mixed messages of the week following her uber-dovish post-Fed conference.
