As long as you can't take the Fed off the table you are going to have a hard time getting footing.
The Fed is in a bind because it is so analog. It looks at the economy, not through the lens of anyone under 30 who is looking for a job or over 50 who has been thrown out of a job. It looks at the economy from the point of view of a percentage of employment, specifically the atavistic unemployment rate and I think it feels naked not taking rates up big given that unemployment is under 5%, as if, somehow, that's the magic number and we don't have to focus on those out of the workforce who have given up.
Not only that, but this endless fixation on wage rates without caveating them by considering that the states have to raise the minimum wage because it is a digitized economy is ridiculous. The states have to take action because it is too easy to eviscerate the workforce in a shared economy. Just go listen to my interview with Lyft and you will know that workers in a brutal shared economy like Uber can't really make the living you think they could because there's now unlimited cabs where they used to be rationed.
And in a world where Amazon (AMZN) can wipe out any retailer, there is no ability to raise wages at pretty much every story in that classic entry job. (Read what the portfolio manager's of Growth Seeker think of their holding Amazon during our Open House.)
Jobs that are not service oriented can't be done here with any efficiency. As Merrill Lynch noted in a piece about Ford (F), the company intends to double Mexican production by 2018. Those workers cost about a fifth of U.S. workers and no health care needs to be provided. Because of NAFTA there's no protection for American workers, especially because who cares if the Union Pacific (UNP) train comes from Monterey or Detroit? Are these people in the thoughts of the Fed? (Thank you to writing partner Matt Horween for this continual insight).
Of course the fixation with stopping the meager wages of the American worker as a justification for higher rates blinds the Fed to issues like the decline and fall of whole American industries, the huge amount of emerging market debt that's calculated in dollars or the sudden collapse of European financials to levels below the Great Recession.
I am not even counting the turmoil in China, Russia or Brazil, all of which are dreadful right now and were important trading partners. Canada's hurting, too. The dollar's calmed down because of a recognition that the Fed may not be able to move in March, but we haven't heard it taken off the table and until it is, the fear will be widespread. (Don't miss Roger Arnold's take on oil stocks.)
Now, I know the Fed shouldn't be stock-market centric. But the stock market is signaling slowdowns everywhere, perhaps because it recognizes that the Fed might act precipitously. The stocks of individual industries -- autos, airlines and housing -- are signaling something awful is about to occur and while it is certainly possible that they are all wrong, that's rarely been the case.
(Real Money chartist Bruce Kamich has all the technical lowdown on these industries and levels.)
There's so much that has to go right to get to a bottom in stocks, but I still think it starts with the Fed. We have another week of earnings ahead and maybe things can be turned around if we get oversold enough. Still, though, we are fighting the Fed and the tape and that's just too many enemies to have to think we can go forth and conquer, let alone find our footing at what everyone seems to acknowledge are precarious levels.